Bus Econ 9.6.1 Question Help A developer has $100,000 to invest in land. He has

Question

Bus Econ 9.6.1 Question Help A developer has $100,000 to invest in land. He has a choice of two parcels (at the same price). One parcel is on the highway and one is on the coast. With both parcels, his ultimate profit depends on whether he faces light opposition from environmental groups or heavy opposition. He estimates that the payoff matrix is as shown to the right (the numbers represent his profit) Answer parts (a d) below. Opposition Light Heavy Highway $90,000 $40,000 Coast $170,000 -$30,000 (a) Which parcel should the developer choose if he is an optimist? O A. Coast OB, Highway Click to select your answer and then click Check Answer ciear All 3 parts remaining OK

Explanation / Answer

Ans:

If he is an optimist,he will choose maximum of maximum of respective alternatives.

So,maximum of all is 170000,which will be paid off by Coast.

So,the developer should choose Coast.

Option A is correct.

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