Instruction 17-3
The following payoff table shows profits associated with a set of three alternatives under two possible events.
$$\begin{array} { c c c c }
\text { States } & A 1 & A 2 & A B \
\hline 1 & 12 & - 2 & 8 \
2 & 4 & 10 & 5
\end{array}$$ where:
S1 is event 1
A1 is action alternative 1
S2 is event 2
A2 is action alternative 2
A3 is action alternative 3
-Referring to Instruction 17-3,if the probability of S1 is 0.5,then the expected monetary value (EMV)for A2 is________.
A) 3
B) 4
C) 8
D) 6.5

Question

Instruction 17-3
The following payoff table shows profits associated with a set of three alternatives under two possible events.
 $$\begin{array} { c c c c } 
\text { States } & A 1 & A 2 & A B \
\hline 1 & 12 & - 2 & 8 \
2 & 4 & 10 & 5
\end{array}$$ where:
S1 is event 1
A1 is action alternative 1
S2 is event 2
A2 is action alternative 2
A3 is action alternative 3
-Referring to Instruction 17-3,if the probability of S1 is 0.5,then the expected monetary value (EMV)for A2 is________.
A) 3
B) 4
C) 8
D) 6.5

Quizplus · Accepted Answer

The expected monetary value (EMV) for A2 is calculated as follows: EMV = (Probability of S1 * Outcome of A2 in S1) + (Probability of S2 * Outcome of A2 in S2) = (0.5 * -2) + (0.5 * 10) = -1 + 5 = 4.

Instruction 17-3 the Following Payoff Table Shows Profits Associated with a Set

Instruction 17-3
the Following Payoff Table Shows Profits Associated with a Set