Question

Revenues Low (0.30) Medium (0.50) High (0.20) A 120,000 255,000 390,000 B 130,000 295,000 460,000 C...

Revenues

Low (0.30)

Medium (0.50)

High (0.20)

A

120,000

255,000

390,000

B

130,000

295,000

460,000

C

100,000

300,000

480,000

Determine the maximum expected payoff.

Group of answer choices

$276,000

$285,000

$241,500

$278,500

Homework Answers

Answer #1
Revenues
Low (0.30) Medium (0.50) High (0.20) Expected Payoff
A 120,000 255,000 390,000 241,500
B 130,000 295,000 460,000 278,500
C 100,000 300,000 480,000 276,000

Expected payoff for A = (120000*0.30)+(255000*0.50)+(390000*0.20) = $241500.

Expected payoff for B = (130000*0.30)+(295000*0.50)+(460000*0.20) =$ 278500.

Expected payoff for A = (100000*0.30)+(300000*0.50)+(480000*0.20) = $276000.

Therefore, the maximum expected payoff is .$278,500. ( which is expected payoff for B)

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