Problem 1 (35 points): Alice owns a small shop and is considering three options for her business next year. Alice has three choices: expand the current shop, move to a new location, or not make any change from her current location. The payoffs she might receive are based on the future market conditions: good market conditions, average conditions, or poor conditions. The table below has the relevant information for this problem. Alice has gathered more information. Specifically, she now has the following probabilities: Probability of a good economy is 15%, Probability of an average economy is 45%, Probability of a poor economy is 40% PAYOFFS Alternatives Expand Move No change Outcomes Good Average Poor $7,500 $4,200 - $1,200 $7,000 $3,600 $800 $4,000 $1,200 $1,100 For each of the following questions, you are to provide the possible options, and then pick the option that is best for Alice. Numbers are expected for all parts. (a) Which option should Alice use if she uses the maximax approach? (5 points) (b) Which option should Alice use if she uses the maximin approach? (5 points) Problem 1 continued below. (c) Which option should Alice use if she uses the criterion of realism approach. Assume a = 0.35? You must show the calculation you made to get to your answer. (5 points) (d) What option should Alice choose if she uses the minimax regret criterion? You must show the calculation you made to get to your answer. (15 points) (e) Using the Expected Monetary Value (EMV) approach, which option should Alice choose? You must show the calculation you made to get to your answer. (10 points)