Question: A small building contractor has recently experienced two successive years in which work opportunities exceeded the firm's capacity. The contractor must now make a decision

A small building contractor has recently experienced two successive years in

A small building contractor has recently experienced two successive years in which work opportunities exceeded the firm's capacity. The contractor must now make a decision on capacity for next year. Estimated profits under each of the two possible states of nature are as shown in the table below. Suppose after a certain amount of discussion, the contractor is able to subjectively assess the probabilities of low and high demand P( low )=3 and P(h[gh)=7. * Profit in \$ thousands. Q-1. Determine the expected profit of each alternative. (Enter your answers in thousands.). a.2. Which aiternative is best? Bo notring Expand \$ubdontract c. Complte the expected value of perfect information. (Enter your answers in thousands.)

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