Question: A) The following payoff table provides profits based on various possible decision alternatives and various levels of demand. States of Nature Demand Alternatives Low Medium

A) The following payoff table provides profits based on various possible decision alternatives and various levels of demand.

States of Nature

Demand

Alternatives

Low

Medium

High

Alternative 1

50

75

100

Alternative 2

80

120

150

Alternative 3

75

75

75

The probability of a low demand is 0.3, while the probability of a medium and high demand is each 0.35.

(a) What decision would an optimist make?

(b) What decision would a pessimist make?

(c) What is the highest possible expected monetary value?

(d) Calculate the expected value of perfect information for this situation.

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