Question: In Example 9.2, a technological failure implies that the game is overthe product must be abandoned. Change the problem so that there are two levels

In Example 9.2, a technological failure implies that the game is over—the product must be abandoned. Change the problem so that there are two levels of technological failure, each with probability 0.1. In the first level, Acme can pay a further development cost D to fix the product and make it a technological success. Then it can decide whether to market the product. In the second level, the product must be abandoned. Modify the decision tree as necessary. Then answer the following questions.

a. For which values of D should Acme fix the product and then market it, given that the first level of technological failure occurs?

b. For which values of D is Acme’s best first decision still to “continue development”?

c. Explain why these two questions are asking different things and can have different answers.

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