A small building contractor has recently experienced two successive years in which work opportunities exceeded the firms 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 (high) = .7.

	NEXT YEAR'S DEMAND
Alternative	Low			High
Do nothing	$	50	*	$	60
Expand		20			80
Subcontract		40			70

* Profit in $ thousands. a-1. Determine the expected profit of each alternative. (Enter your answers in thousands. Omit the "$" sign in your response.)

	Expected Profit
Do Nothing	$ ?? thousands
Expand	$ ?? thousands
Subcontract	$?? thousands

a-2. Which alternative is best?

• Do nothing

• Expand

• Subcontract

c. Compute the expected value of perfect information. (Enter your answers in thousands. Omit the "$" sign in your response.) EVPI $?? thousands