Answers
A random variable x is a numerical outcome of a probability experiment. There is a numerical value which is determined by chance for each outcome in the procedure or experiment. Therefore, a random variable is used for describing outcomes using numerical values.
x = time in minutes
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Haste Enterprises issues 20-year, $1,000,000 bonds that pay semiannual interest of $50,000. If the effective annual rate of interest is 11%, what is the issue price of the bonds? Some relevant and irrelevant present value factors: * PV of ordinary annuity of $1: n = 20; i = 11% is 7.96333 **PV of $1: n = 20; i = 11% is 0.12403 * PV of ordinary annuity of $1: n = 40; i = 5.5% is 16.04612 **PV of $1: n = 40; i = 5.5% is 0.11746 Multiple Choice $1,000,000. $919,766. $1,802,306. $992,948.
Answers
Answer: $919,766
Explanation:
The Present Value of issuance price of a bond is:
= Present value of interest payments + Present Value of par value at maturity
Present value of interest payments:
The payments are constant so this is an annuity.
Payments are semi annual so the variables should be adjusted for this.
Interest = 11%/2 = 5.5%
Number of periods = 20 * 2 = 40 semi annual periods.
Present value = Annuity * Present value of annuity factor, 5.5%, 40 periods
= 50,000 * 16.04612
= $802,306
Present value of par at maturity:
= Par value * discount factor, 5.5%, 40 years
= 1,000,000 * 0.11746
= $117,460
Issue price of bond:
= 802,306 + 117,460
= $919,766
6. Comparative advantage is when A. B. C. D.
A. one person can produce more of a good than another person.
B. one person can produce a good at a lower opportunity cost than another person.
C. Two parties can complete a task equally well.
D. one person can produce a good at a higher opportunity cost than another person.
Answers
B. one person can produce a good at a lower opportunity cost than another person.
Comparative advantage is a concept in economics that refers to the ability of a person, firm, or country to produce a good or service at a lower opportunity cost than another. Opportunity cost is the cost of forgoing an alternative opportunity in order to pursue a particular action. Hence, the correct option will be B: one person can produce a good at a lower opportunity cost than another person.
For example, let's say Person A can produce 10 units of product X or 5 units of product Y in one hour, while Person B can produce 8 units of product X or 4 units of product Y in one hour. Person A has an absolute advantage in producing both X and Y, as they can produce more of each product than Person B. However, Person B has a comparative advantage in producing product Y, as they can produce it at a lower opportunity cost than Person A, since they have to give up less of their production of product X to produce product Y.
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1 Type the correct answer in the box. Spell all words correctly. Which type of market research data is Roland about to analyze? Roland works as a researcher for his manufacturing firm. He has conducted primary research to collect relevant market research data that will help his firm. He decided to use mathematical and statistical tools to analyze the data because the data is____ In nature.
Answers
Answer:
quantitative
Explanation:
Systematic application of the statistical as well as logical techniques to describe the data scope, condense the data representation, modularize the data structure, illustrating through images, graphs and tables, and evaluating the statistical inclinations or probability data, so as to derive a meaningful conclusions, is called as Data Analysis.
Analyzing data can be qualitative in nature or quantitative in nature.
In the context, Ronald working as a researcher in a firm uses the mathematical as well as statistical tools to analyze data as his data are is quantitative in nature.
Springer Products manufactures three different product lines, Model X, Model Y, and Model Z. Considerable market demand exists for all models. The following per unit data apply: Model X Model Y Model Z Selling price $52 $60 $74 Direct materials 8 8 8 Direct labor ($16 per hour) 16 16 32 Variable support costs ($5 per machine-hour) 5 10 10 Fixed support costs 12 12 12 If there is excess capacity, which model is the most profitable to produce
Answers
Answer:
Model Y
Explanation:
Calculation for the which model is the most profitable to produce
Using this formula
Most profitable to produce=Selling price-Direct materials-Direct labor-Variable support costs
Let plug in the formula
Model X $52 - $8 - $16- $5 = $23
Model Y $60 - $8- $16 - $10 = $26 Most profitable
Model Z $74- $8 - $33 - $10 = $24
Therefore the model that is the most profitable to produce is MODEL Y because it has the highest amount of $26
Consider Nibbles, a very specialized brand of parakeet chow.
When its price is $16 per package, it sells 40,000 units. When its price rises to $20, it sells 30,000
units. Calculate its price elasticity of demand, carefully following all numeric directions. You will
interpret this result in the next question.
(Note: Round intermediate steps to four decimal places and your final answer to two. Enter only numbers,
a decimal point, and/or a negative sign as needed in the blank.)
Answers
Based on the amount sold at the various prices for Nibbles, the price elasticity of demand would be -1.
First find the percentage changes in price and quantity sold.
What is the percentage change in price and quantity?= (New price - Old price) / Old price
= (20 - 16) / 16
= 25%
= (New quantity - Old quantity) / Old quantity
= (30,000 - 40,000) / 40,000
= - 25%
What is the price elasticity of demand?= Change in quantity / Change in price
= - 25% / 25%
= - 1
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Researchers plotted a distribution curve for leg length in a population of birds, with length from short to long on the x-axis. The curve shifts to the right after a disturbance. Which statement is correct about natural selection in this population of birds?
Birds with long legs were selected for.
Birds with long legs and birds with short legs were selected for.
Birds with medium-length legs were selected for.
Birds with short legs were selected for.
Answers
The correct statement about natural selection in the population of birds is "C-Birds with long legs were selected for". Option (a) is correct.
What is Natural Selection?The process through which populations of living things adapt and evolve is known as natural selection. A population's members are naturally varied, which means that they are all distinctive in some respects. This variety indicates that some people have characteristics that are more environment-appropriate than others.
Natural selection in the population of birds experiences probably favored individuals with longer legs, as they are more likely to survive the disturbance.
Therefore, Option (a) is correct.
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Under what circumstances might Dimon need to change his approach to organizational
control?
Answers
Answer:
The circumstances that Dimon may need to change his approach to organizational control are if managers are reluctant to submit their 50-page reports showing financial ratios and results, product, sales, and detailed expenses of every worker
Explanation:
The circumstances that Dimon may need to change his approach to organizational control are if managers are reluctant to submit their 50-page reports showing financial ratios and results, product, sales, and detailed expenses of every worker.
What is organizational control?Organizational control is the process by which managers and other leaders in an organisation ensure that the company meets its objectives. It entails developing rules, procedures, or best practices for an individual or department within a company.
These policies can assist in directing the actions of a team or other members of the company, potentially increasing the organization's overall productivity.
Organizational control is important because it allows us and our colleagues to focus on and achieve your objectives. Implementing organizational control systems can help the company save money and time by outlining how to perform specific actions or ensuring employees meet certain sales targets.
Therefore, Dimon need to change his approach to organizational control.
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An economy that has government collecting taxes and making regulations is called a
Answers
Answer:
If I recall it may be called Revenue.
Explanation:
If this is not the answer you were looking for, please don't hesitate to comment below so I can get back to you as soon as I can. Have a nice Day/Night! :)
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Sheridan Company has $21000 of ending finished goods inventory as of December 31, 2019. If beginning finished goods inventory was $15000 and cost of goods sold was $50000, how much would Sheridan report for cost of goods manufactured
Answers
Answer:
$56,000
Explanation:
The computation of the cost of goods manufactured is shown below:
As we know that
Cost of goods sold = Opening finished goods inventory + cost of goods manufactured - ending finished goods inventory
$50,000 = $15,000 + cost of goods manufactured - $21,000
So, the cost of goods manufactured is
= $50000 + $6,000
= $56,000
Scobie Company began 2016 with a retained earnings balance of $142,400. During an examination of its accounting records on December 31, 2016, Scobie found it had made the following material errors, for both financial reporting and income tax reporting, during 2015.
1. Depreciation expense of $15,000 inadvertently had been recorded twice for the same machine.
2. No accrual had been made at year-end for interest; therefore, interest expense had been understated by $4,000.
Scobie’s net income after taxes during 2016 was $60,000. The company has been subject to a 30% income tax rate for the past several years. It declared and paid dividends of $13,000 during 2016.
Required:
1. Prepare whatever journal entries in 2016 are necessary to correct Scobie’s books for its previous errors. Make your corrections directly to the Retained Earnings account.
Answers
The total retained earnings on 31st December 2016 is $197,100. The journal entry are attached below.
What is Retained Earnings?Retained earning is basically the profits of the company which is kept aside to meet the future requirement of the company. It the amount which is left over after deducting all cost such as direct cost, indirect cost, income taxes and dividend.
The retained earning is used in the future projects or for buying the equipment for the company.
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.
Identify 10 businesses within your area or municipality. Write about their contributions to the economic growth of your area and municipality.
Answers
Some businesses in municipalities that contribute to the economic growth of the area include:
Tech companyManufacturing Small business Healthcare provider Restaruant Construction company Retail company Tourism company Financial institution Renewable energy How do these companies contribute to economic growth ?Tech provides high-paying jobs and attracts talent to the area, as well as contributing to innovation and technological advancement in the region. Small businesses contributes to the local economy by providing goods and services to the community, creating jobs, and supporting other businesses in the area.
Manufacturing company creates jobs and generates revenue through the production and sale of goods, as well as providing opportunities for local suppliers and vendors.
This is basically the same for all the other types of companies as they mostly give people jobs and contribute to economic growth in their industry specifitc way.
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To what are multiple servers arranged in racks related?
A: clouds
B: Microsoft Visio
C: data centers
D: implementation
Answers
Answer: its data centers because it points too rack servers but the only answer that sticks would be data centers
Explanation:
Answer:
Various number of servers placed in racks are related to Rack servers in data center.
Explanation:
In data center commonly used server is Rack servers. Servers are being arranged in the mounted racks are generally called as rack servers in the data center. Internal fans are being fitted inside the racks make the servers to make a good airflow and maintain the cooling. There are different types of racks available the user can choose based on their requirement.
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PROJECT: FINANCE OPTIONS, CREDIT USE, AND BANKING Assignment Directions: Using all of the concepts you have attained throughout the course of the lesson (capital, collateral, etc.), compose a two-page, detailed business plan that illustrates how you plan to enter the “industry of your dreams” (fashion, entertainment, educational materials, etc.). Assignment Guidelines: Include at least four important concepts discussed within the lesson. Submission Requirements: Two-page business plan When submitting written assignments, please remember to: Submit the assignment question(s) and your responses. Proofread for spelling, grammar, and punctuation. Remember to use complete sentence structure. Make sure paragraphs have at least six sentences.
Answers
The industry of my choice is the fashion industry. The way I plan to enter the fashion industry is given below:
Meeting so many people with various origins, experiences, and stories is one of the benefits of working in the fashion industry. In the fashion industry, you may learn a lot from those around you, and the individuals you meet early on in your career might very well be important to your development in the future.
Therefore, Internships are the ideal starting point. Nothing equals actual experience in the fashion industry, even if you have studied the subject. You must be completely alright with beginning at the bottom. An internship in the fashion industry will undoubtedly complete your textbook education and advance your career.
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The law in your state allows an employer to create an
enforceable agreement that restricts an employee's
postemployment activities as long as the restriction is
reasonable in terms of purpose, geographic area, and
duration. Your employer is a dominant force in the
technology industry, an industry that is ever changing at
a rapid pace. As a result, top employees want the flex-
ibility to move from company to company. Of course,
having and keeping top employees is a competitive
advantage. Assume that you are an executive charged
with determining whether your firm will embrace a
postemployment restriction within its contracts of
employment. If you adopt a justice theory approach,
what result might you adopt, and why? If you adopt a
utilitarianism approach, what result might you adopt,
and why?
Answers
Utilitarian theory respects all persons equally without particular regard and assists people in making moral decisions. The utilitarian theory provides a basic technique. According to utilitarian philosophy, humans value all moral terms such as self-sacrifice, justice, and honesty.
There are various philosophies of justice, including utilitarianism, justice as fairness, and libertarianism. Utilitarians were those who supported utilitarian doctrine. With utilitarian theory being one of the theories of justice, the researcher was compelled to investigate how the theory provides justice to people, how it impacts human behaviour, and the issues the theory faces in the present world. Act utilitarians argue that their theory gives compelling grounds to reject many conventional moral statements and substitute them with moral perspectives based on the consequences of actions. People who are persuaded by act utilitarianism's critics may decide to abandon utilitarianism outright and adopt another form of moral theory.
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b) Find the standard deviation and the coefficient of variation of the following data. 25 Marks Interval Frequency Interval Frequency 3.00-3.25 6 4.00-4.25 47 3.25-3.50 19 4.25-4.50 29 3.50-3.75 35 4.50-4.75 15 3.75-4.00 44 4.75-5.00 5
Answers
The standard deviation is 0.4182 and the coefficient of variation is 10.5%.
Given the following data Interval Frequency 3.00-3.25 64.00-4.25 473.25-3.50 194.25-4.50 293.50-3.75 354.50-4.75 153.75-4.00 445.00-4.75 5 The formula for finding the standard deviation is:\($$ \sigma =\sqrt{ \frac{\sum f(x-\overline{x})^2}{N}} $$\)
The table below shows the calculation; Interval \($X$ Midpoint ($X_i$)\) Frequency \(($f$) $x-\bar{x}$ $f(x-\bar{x})$ $(x-\bar{x})^2$ $f(x-\bar{x})^2\)
$3.00-3.25 3.125 6 -0.725 -4.35 0.525625 3.153.25-3.50 3.375 19 -0.475 -9.025 0.225625 4.279.50-3.75 3.625 35 -0.225 -7.875 0.050625 1.773.75-4.00 3.875 44 0.025 1.1 0.000625 0.274.00-4.25 4.125 47 0.275 12.925 0.075625 3.554.25-4.50 4.375 29 0.525 15.225 0.275625 7.994.50-4.75 4.625 15 0.775 11.625 0.600625 9.01.75-4.00 4.875 5 1.025 5.125 1.050625 5.25 \($\sum f=200$ $\sum f(x-\bar{x})= 3.15$ $\sum f(x-\bar{x})^2= 35.01$\)
The variance is: \($ \sigma^2 =\frac{\sum f(x-\overline{x})^2}{N} $$\sigma^2=\frac{35.01}{200}=0.1751$\)
Therefore, the standard deviation is: \($$ \sigma=\sqrt{ \sigma^2} $$$ \sigma=\sqrt{ 0.1751}=0.4182$\)
The formula for finding the coefficient of variation is:$$ C.V = \(\frac{\sigma}{\overline{x}} \times 100\% $$\)
The coefficient of variation is:$$ C.V = \(\frac{0.4182}{3.985} \times 100\% $$$C.V = 10.5\%$\)
Therefore, the standard deviation is 0.4182 and the coefficient of variation is 10.5%.
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Banks offer various types of accounts, such as savings, checking, certificate of deposits, and money market, to attract customers as well as meet their specific needs.
a. True
b. False
Answers
Answer:
it's false.. because those are not the various types of account.
Name two ways that direct deposit provides convenience.
Answers
Papa Bean, a global chain of pizzerias, has operations in more than 80 countries around the world. Its menu varies considerably in different countries, assimilating minute details from the local culture to add to its truly global flavor. Which of the following is most likely a reason for the success of Papa Bean in international markets?
A) A global culture
B) Adaptability
C) Human resources
D) Financial resources
E) Rigidity
Answers
The most likely reason for the success of Papa Bean in international markets is its adaptability.Therefore the correct option is B
Adaptability refers to the ability of a company to adjust and modify its products or services to meet the unique needs and preferences of customers in different markets. In the case of Papa Bean, they have successfully adapted their menu in more than 80 countries by assimilating minute details from the local culture, which adds to their truly global flavor
This adaptability is crucial for a global chain like Papa Bean, as it allows them to cater to diverse tastes and preferences across the world. By understanding and incorporating elements of the local culture into their offerings, Papa Bean demonstrates sensitivity to cultural differences, which helps them connect with their customers and establish a loyal customer base.
Furthermore, being adaptable also helps Papa Bean to stay competitive in the international markets, as they can continuously modify their menu to keep up with changing customer preferences and market trends. This flexibility in adjusting to new circumstances enables the company to maintain a strong market presence and attract new customers.
In summary, the success of Papa Bean in international markets can be attributed to their adaptability in tailoring their menu to accommodate local tastes and preferences. This ability to adjust and evolve their offerings ensures that they remain relevant and appealing to customers in diverse markets around the world.Therefore the correct option is B
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Kramer Corporation recently announced that its net income (EAT) was lower than last year. However, analysts estimate that the company's net cash flow (NCF) increased. What factors could explain this discrepancy
Answers
Answer:
When you are preparing the cash flow statement, some adjustments are made that actually increase the cash flow even if the net income has decreased, for e.g.:
lower accounts receivableslower inventorieshigher depreciation and amortization expenseshigher accounts payables and accrualssale of investmentsnew long term debtless dividends distributednew capital raisedWhen Carter decided to start a luxury cologne company, he hired a wealthy
aristocrat from France as his primary spokesperson. Which aspect of the marketing
mix focuses on this action?
(1 point)
O positioning
O price
O unique selling proposition
O personal selling
Answers
Answer: Personal Selling.
Explanation:
Personal Selling. Personal selling focuses on the direct communication and relationship building between the company and the customer. In this case, Carter hired a wealthy aristocrat from France to be the spokesperson for his cologne company, which is an example of personal selling.
If I buy 4 books and 1 pen. 4 books: $14.29, $14.29, $13.29, and $9.29. Pen: $5.29. And I gave $60.00. How much change do I get back?
(No need to add tax because for the 4 books and 1 pen already has tax added.)
Answers
the answer is seventeen
How does the practice of fractional reserve banking affect banks?
OA. It ensures that banks always have cash reserves equal to their
OB. It allows banks to keep only a small percentage of their deposits in
OC. It gives banks the freedom to change interest rates on loans at
total deposits.
reserve.
any time.
OD. It prevents banks from profiting off loans they provide with
deposited funds.
Answers
Answer:
It allows banks to keep only a small percentage of their deposits in reserve.
Explanation:
A fractional reserve system requires commercial banks to maintain only a percentage of their customer deposits at their custody at any time. It means that at any time, only a fraction of deposits will have physical cash backing. The commercial banks' regulator determines the fraction or percentage of deposits to be maintained.
The reserves maintained services to cater to regular and any abnormal withdrawals. Commercial banks usually loan out the other fraction to other customers. Reserves are also a monetary policy tool.
Answer:
Explanation:
It allows banks to keep only a small percentage of their
Briefly summarize the concept of the division of labour. What does Smith think is good about the division of labour?
Answers
Answer:
the division of labor was a way to make laboring the old times more fair in a way
Explanation:
When it come to getting your alcohol awareness card
Two friends are in your business. One of them is visibly intoxicated. You tell the VIP you cannot serve him any more alcohol. The friend gives the VIP their drink. What must you do?
Answers
If you are a server or bartender with an alcohol awareness card, it is important to adhere to the laws and regulations regarding the sale and service of alcohol.
As a server or bartender with an alcohol awareness card, if a visibly intoxicated VIP is given another drink by their friend, it is your responsibility to take appropriate steps to prevent the VIP from consuming more alcohol. Politely remind the friend that it is illegal to give alcohol to someone who is visibly intoxicated and refuse to serve any more alcohol to the VIP.
Inform the friend that their action is a violation of the laws, and involve a manager or supervisor if necessary to prevent the VIP from being served any more alcohol. As a responsible server or bartender, you have a legal and ethical responsibility to serve alcohol responsibly and prevent overconsumption and impaired driving.
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Identifying accurately the resources required to start a business venture, including all the activities and processes in the business, is best accomplished by
a. making financial assumptions.
b. defining a launch strategy.
c. positioning a venture in the value chain.
d. constructing a business process map.
e. creating a timeline.
Answers
Building a business process map helps you accurately identify the resources needed to start a business venture. Option d is correct.
What is a business process map?It corresponds to a tool that allows organizations to have a visualization in the form of graphics of all activities and processes developed within the company.
Through process mapping, it is possible to increase understanding of the necessary steps for the development of products, processes and services, so that the organizational flow occurs as planned.
Therefore, the mapping of processes helps to identify the resources necessary to start a commercial enterprise by allowing the visualization of the resources necessary for all the stages and processes that the company will go through to reach its objectives and market goals.
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Several team members are overallocated, and you want to see only their assignments in your schedule. Which feature can help you focus on those overallocations
Answers
The feature that can help you focus on those overallocation is: the Overallocation Field.
What is the Overallocation Field?The overallocation field is a framework that allows an individual to view the amount of work or resources that were overallocated and compare these against time.
When added to the Task Usage panel, it will be possible to view the amount of work or resources that were overallocated.
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Each year The Calendar Shop orders calendars for the coming year. Anticipated demand for the coming year is for 2000 calendars. The Shop's fixed costs are $750. Each calendar cost $3 and The Calendar Shop sells each one for $5.00. At the end of July during the next year, The Shop will reduce the calendar price to 60% of the original selling price and will sell all the surplus calendars at this price. Assume the original selling price varies from $4.00 to $7.25 in increments of $0.25. The Calendar Shop can order in increments of 250 calendars up to a maximum of 4000 calendars. Answer the questions below. For each question, start with the original conditions given here.
10.If the sale price is set at $4.75, the Calendar Shop can expect to make the maximum profit when the order quantity is : A. 2,000 B. 2,500 C. 3,000 D. 3,500
Answers
A. 2,000. The maximum profit is obtained when the order quantity is set at 2,000, since this is the anticipated demand for the coming year.
What is profit?Profit is the amount of money a business earns after expenses are deducted from its total revenue. It is the difference between a company's total revenue and expenses, and it is a measure of the business's performance. It serves as an indicator of a company's financial health and is an important metric for investors and owners. Profit is also referred to as net income, net earnings, or the bottom line.
With 2,000 calendars, the Calendar Shop can cover its fixed costs of $750, and will make a profit of $2,250 ($5.00 minus $2.75 per calendar). With an order of more than 2,000 calendars, the price per calendar will have to be reduced, resulting in a lower overall profit.
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Schwarzentraub Corporation's expected free cash flow for the year is $500,000; in the future, free cash flow is expected to grow at a rate of 5%. The company currently has no debt, and its cost of equity is 10%. Its tax rate is 25%. Suppose the firm issues $7 million debt at a rate of 8%. Use the compressed adjusted value approach to answer the following questions. Do not round intermediate calculations. Find VU. Enter your answer in millions. For example, an answer of $10,550,000 should be entered as 10.55. Round your answer to two decimal places.
Answers
6.
Which of the following is an example of representative money?
O gold earrings
O an IOU note
O a fur coat
O diamond
Answers
Answer:
an IOU note
Explanation:
IOU or ’I owe you’ is an informal document that recognizes and acknowledges the debts. IOU is not the medium to discuss the conditions or the time to repay.
There is no standard format for the IOU. Time, date, interest, payments don’t have to be included in this document.
The informal nature of the IOU means that there is some uncertainty if it’s the real contract or not, so the law can’t be enforced so easily, like when the contract is formal. This is the reason why IOU is not considered as a negotiable instrument.
Hale’s TV Productions is considering producing a pilot for a comedy series in the hope of selling it to a major television network. The network may decide to reject the series, but it may also decide to purchase the rights to the series for either one or two years. At this point in time, Hale may either produce the pilot and wait for the network’s decision or transfer the rights for the pilot and series to a competitor for $100,000. Hale’s decision alternatives and profits (in thousands of dollars) are as follows:
State of Nature
Decision Alternative
Reject, s1
1 Year, s2
2 Years, s3
Produce pilot, d1
-100
50
150
Sell to competitor, d2
100
100
100
The probabilities for the states of nature are P(s1) = 0.20, P(s2) = 0.30, and P(s3) = 0.50. For a consulting fee of $5000, an agency will review the plans for the comedy series and indicate the overall chances of a favorable network reaction to the series. Assume that the agency review will result in a favorable (F) or an unfavorable (U) review and that the following probabilities are relevant:
P(F) = 0.69
P(s1 | F) = 0.09
P(s1 | U) = 0.45
P(U) = 0.31
P(s2 | F) = 0.26
P(s2 | U) = 0.39
P(s3 | F) = 0.65
P(s3 | U) = 0.16
Construct a decision tree for this problem.
What is the recommended decision if the agency opinion is not used? What is the expected value?
Answers
Answer:
To construct the decision tree, we can follow these steps:
1. Start with the initial decision nodes representing the two decision alternatives: "Produce pilot" (d1) and "Sell to competitor" (d2).
2. Assign the payoffs for each decision alternative under each state of nature.
3. Add chance nodes for each state of nature and connect them to the corresponding decision alternatives.
4. Assign the probabilities of each state of nature at the chance nodes.
5. Calculate the expected payoffs at each chance node by multiplying the payoffs with their respective probabilities and summing them up.
6. Determine the optimal decision by comparing the expected payoffs at the initial decision nodes.
Here is the decision tree for this problem:
| Produce pilot (d1)
| -100
|____________
/|\
/ | \
/ | \
/ | \
P(F) = 0.69 / | \ P(U) = 0.31
/ | \
/ | \
/ | \
/ | \
s1 / | \ s2
/ | \
/ | \
/ | \
/ | \
/ | \
50 | F U F | 100
| |
| |
| |
| s3 | s3
| |
150| F | 100
|_______________________________|
If the agency opinion is not used, the recommended decision would be to produce the pilot (d1) since it has a higher expected value compared to selling to the competitor (d2).
To calculate the expected value:
Expected value (d1) = (-100 * P(s1 | F) * P(F)) + (50 * P(s2 | F) * P(F)) + (150 * P(s3 | F) * P(F))
= (-100 * 0.09 * 0.69) + (50 * 0.26 * 0.69) + (150 * 0.65 * 0.69)
= -6.93 + 8.97 + 66.88
= 68.92
Expected value (d2) = (100 * P(s1 | U) * P(U)) + (100 * P(s2 | U) * P(U)) + (100 * P(s3 | U) * P(U))
= (100 * 0.45 * 0.31) + (100 * 0.39 * 0.31) + (100 * 0.16 * 0.31)
= 13.95 + 12.09 + 4.96
= 30
Comparing the expected values, the recommended decision is to produce the pilot (d1) with an expected value of 68.92.