Econ3300HW10

Econ3300HW10 - A What is the decision to be made what is...

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A) What is the decision to be made, what is the chance event, and what is the consequence? Identify the alternatives for the decisions and the possible outcomes for the chance events? Decision to be made is to Plant Chardonnay grapes is Riesling grapes or to plant both varieties. Chance event is the demand. The possible outcomes are either weak demand or strong demand Consequence is the annual profit which is to be maximized. B.) Develop a decision tree. The decision tree has four nodes, numbered 1-4, that represent the decisions and chance events. Node 1 is the decision node and 2, 3 and 4 depict the chance nodes. The branches leaving the decision node corresponded to the states of nature. c. Use the expected value approach to recommend which alternative Seneca Hill Winery should follow in order to maximize expected annual profit. If Seneca Hill only plants Riesling grapes, the probabilities for the weak and strong demands and the respective payoffs are given in the above table. The expected value of decision alternative di and state of nature sj
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This note was uploaded on 06/30/2011 for the course ECON 3300 taught by Professor Staff during the Spring '08 term at Kennesaw.

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Econ3300HW10 - A What is the decision to be made what is...

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