Chapter5Q02answer0[1] - Chapter 5 Question 2 a) 0.6...

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Chapter 5 a) 0.6 Payoff ($) Increases in value 200 000 Purchase 96 000 0.4 Does not increase in –60 000 Do not purchase 0 0 Purchasing the commodity leads to the highest expected profit of $96 000. b) –100 000 –50 000 0 50 000 100 000 150 000 200 000 250 000 0 0.2 0.4 0.6 0.8 1 p (commodity price increases) Expected profit ($) Purchase Do not purchase Purchasing the commodity will yield
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