Question

Nick has plans to open some pizza restaurants, but he is not sure how many to open. He has prepared a payoff table to help analyze the situation.

States of Nature
Alternatives Good Market Fair Market Poor Market

Open 1 380,000 70,000 -400,000

Open 2 200,000 80,000 -200,000

Do Nothing 0 0 0

Nick believes there is a 40 percent chance that the market will be good, a 30 percent chance that it will be fair, and a 30 percent chance that it will be poor. A market research firm will analyze market conditions and will provide a perfect forecast (they provide a money back guarantee). What is the most that should be
paid for this forecast?
(4/4 Points)

A) $123,000

B) $ 44,000

C) $176,000

D) $ 53,000

E) None​

Answer 1

Answer:

He Has Prepared A Payoff Table To Help Analyze The Situation. States Of Nature Alternatives Good Market Fair Market Poor Market Open 1 380,000 70,000 -400,000 Open 2 200,000 80,000 -200,000 Do Nothing 0 0 0 ..