The brothers who go to Mother\'s, a new venture of Block C Enterprises, have exp

Question

The brothers who go to Mother's, a new venture of Block C Enterprises, have expressed the opinion that redecorating would reduce the local "WOLF" population and return Mother's to its former friendly atmosphere. The manager of Mother's estimates that profits will depend upon the decor and the "WOLF" population with a payoff table as follows:

WOLF Population

Declining

Stable

Growing

16000

8000

4000

11000

11000

6000

8000

11000

10000

2000

8000

18000

Research indicates that the probability for declining, stable or growing wolf populations are 45%, 30% and 25% respectively. Calculate the Expected Monetary Value for this decision problem.

Question 1 options:

9600

9850

9950

10000

10200

10300

10600

11200

WOLF Population

Declining

Stable

Growing

South Phili

16000

8000

4000

Sports Bar

11000

11000

6000

Kon-Tiki

8000

11000

10000

Art Deco

2000

8000

18000

Explanation / Answer

* Calculation example: 16000 x 45% + 8000 x 30% + 4000 x 25% = 10600

So, EMV = 10600

WOLF Population Expected Declining Stable Growing Monetary Value South Phili 16000 8000 4000 10600 * Sports Bar 11000 11000 6000 9750 Kon-Tiki 8000 11000 10000 9400 Art Deco 2000 8000 18000 7800 Probability 45% 30% 25%

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