Question: Question 3-10 POINTS Below is a payoff table for an air service between two cites. The management is deciding between type of service i.e.,

Question 3-10 POINTS Below is a payoff table for an air service between two cites. The management is deciding between type of service i.e., full service or budget service. Full service includes jets with business and first-class seating options whereas budget option will include economy and premium economy seating options. The best option will be completely dependent on the market demand. The payoff table shows the estimated quarterly profits (in thousands of dollars). Service Type Full Service Budget Service High Demand $955 $645 Low Demand -$488 $350 a. If the probability of high demand is 0.65 and that of low demand is 0.35, then use the expected value approach to recommend the type of service. Which one will be recommended? b. After a survey, if the probability of high demand is 0.85 and that of low demand is 0.15, then use the expected value approach to recommend the type of service. Which one will be recommended?

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