Question: I need help with this practice question 28 by explaining the steps to figuring out the correct question. Answer questions 27 and 28 based upon
I need help with this practice question 28 by explaining the steps to figuring out the correct question.

Answer questions 27 and 28 based upon the decision tree illustrated below. The dollar amounts stated a: received\" at each associated outcome. Assume that the decision make is trying to maximize expected utili preferences consistent with the Bernoulli Utility Function u(x) = J; . Firm 2 is trying to get chosen t producer of a component by Firm Y. Firm 2' has an initial decision to either \"Continue tidal)\" or \"Aband This 3&0 will be either a \"Success\" or \"Failure.\" Aer realizing either successful or failed 3&0, Firm 2 make a proposal (\"Prqoosal to Firm 1" or not (\"No Proposal \") lf they choose to make a proposal they wi. chosen as the sole supplier of this component (\"Win \") or not chosen ( \"Lose \".) Win 27. 28. $902,5' Proposal Success Continue R&D $70,225 5w No Proposal $70,225 Suppose \"p" is equal to .40. The value of \"W' which makes the rm indifferent between choosing R&D\" and \"Abandon MD\" is (i.e., the rm would want to choose \"Continue R&D\"' if \"W\" is less than or equal to J. A. $93,636 B. $96,100 C. $161,604 D. $198,500 Suppose \"W\" is equal to $81,796. The value of \"p\" which makes the rm indifferent betweei \"Continue R&D\" and \"Abandon MD" is (i.e., the rm would want to choose \"Contim and only if \"p\" is greater than or equal to l. A. .20 B. .25 C. .30 D .35
Step by Step Solution
There are 3 Steps involved in it
Get step-by-step solutions from verified subject matter experts
