A firm is considering the decision of investing in new plants.It can choose no new plants,one new plant,or two new plants.The following table gives the profits for each choice under three states of the economy.The manager assigns the following probabilities to each state of the economy: the economy expands,20%,the economy contracts,40%,or the economy is unchanged 40%. Using the expected value rule which is correct? Building
A)no new plants is better than one.
B)one new plant is better than two.
C)one new plant is equivalent to building two.
D)one new plant is better than none.
E)c and d

Question

A firm is considering the decision of investing in new plants.It can choose no new plants,one new plant,or two new plants.The following table gives the profits for each choice under three states of the economy.The manager assigns the following probabilities to each state of the economy: the economy expands,20%,the economy contracts,40%,or the economy is unchanged 40%.  Using the expected value rule which is correct? Building
A)no new plants is better than one. 
B)one new plant is better than two. 
C)one new plant is equivalent to building two. 
D)one new plant is better than none. 
E)c and d

Quizplus · Accepted Answer

The Answer of A firm is considering the decision of investing in new plants.It can choose no new plants,one new plant,or two new plants.The following table gives the profits for each choice under three states of the economy.The manager assigns the following probabilities to each state of the economy: the economy expands,20%,the economy contracts,40%,or the economy is unchanged 40%.  Using the expected value rule which is correct? Building
A)no new plants is better than one. 
B)one new plant is better than two. 
C)one new plant is equivalent to building two. 
D)one new plant is better than none. 
E)c and d

A Firm Is Considering the Decision of Investing in New