Question

A company is considering advertising its new product on TV on Super Bowl Sunday.

Let d₁, d₂ and d₃ represent its decision to purchase one, two or three 30-second commercials respectively.
Dependent on whether the game is S₁ = “Dull,” S₂ =“Average”, S₃ =“Above average,” or S₄ = “Exciting,” their probabilities and profits are as follows:

	S1	S2	S3	S4
Probability	0.1	0.3	0.4	0.2
d1	5	12	10	8
d2	-5	6	12	12
d3	7	14	-6	13

The expected pay-off of the best decision would be:

Select one:

a. 12.3

b. 9.7

c. 7.6

d. 8.3

Answer 1