1. what should you do? question 2. what is the expected value of perfect information? Question 3. what is the expected value of sample information?

QUESTION 1 You have decided to open a restaurant in Huntington. The following table gives the payoffs based on two states of nature, favorable and unfavorable demand. You belleve that the probability of a favorable market is 0.8. You can open any one of three different sizes of restaurant. Open Favorable Unfavorable Large Restaurant 55,000 -30,000 Medium Restaurant 40,000 -5,000 Small Restaurant 20,000 15,000 You have decided to do some marketing research (using the skills that you learned). If the marketing research shows strong demand, then the probability of favorable demand goes to .95. If the marketing research shows weak demand, then the probability of favorable demand goes to .40. What should you do? T T TT Paragraph . Arial * 3 (12pt) . . . E . T . X D D Q . E 3 SS TT, Patte p Words:0 and submit. Click Save All Answers to save all answers. Save All Answers Close W