Problem 3 (Thompson Lumber)

Consider the Thompson Lumber Company example. Before deciding on building a new plant, John has the option of hiring ABC, Inc. to conduct a market survey, at a cost of $10,000. John has a prior belief that P(Fav) = 0.8, and historical data from ABC, Inc.:

	Positive Survey Result	Negative Survey Result	Total
Favorable Market	35	15	50
Unfavorable Market	25	25	50
Total	60	40

(a) Draw a decision tree to represent the situation after conducting the survey.

(b) Should John hire ABC to conduct the survey?

(c) Whats the efficiency of the sample information?