1-20chapter stats

True false 10 a decision makers expected utility is

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Unformatted text preview: $98,000, EMV2 = $95,000, choose strategy 1 B. EMV1 = $88,000, EMV2 = $95,000, choose strategy 2 C. EMV1 = $88,000, EMV2 = $85,000, choose strategy 1 D. EMV1 = $66,667, EMV2 = $76,667 choose strategy 2 E. EMV1 = $120,000, EMV2 = $110,000, choose strategy 1 1-1875 Chapter 01 - An Introduction to Business Statistics 31. The alternatives 1 and 2 in the following payoff table represent the two possible manufacturing strategies that the EKA manufacturing company can adopt. The level of demand affects the success of both strategies. The states of nature (S1) represent the levels of demand for the company products. S1, S2 and S3 characterize high, medium and low demand with probabilities of .3, .6 and .1 respectively. The payoff values are in thousands of dollars. The management believes that the weather conditions significantly affect the level of demand. 48 monthly sales reports are randomly selected. These monthly sales reports showed 15 months with high demand, 28 months with medium demand, and 5 months with low demand. 12 of the 15 months with high demand had favorable weather conditions. 14 of the 28 months with medium demand had favorable weather conditions. Only 1 of the 5 months with low demand had favorable weather conditions. What is the probability that weather conditions are poor, given that the demand is high? A. .2 B. .5 C. .8 D. .25 E. .75 1-1876 Chapter 01 - An Introduction to Business Statistics 32. The alternatives 1 and 2 in the following payoff table represent the two possible manufacturing strategies that the EKA manufacturing company can adopt. The level of demand affects the success of both strategies. The states of nature (S1) represent the levels of demand for the company products. S1, S2 and S3 characterize high, medium and low demand with probabilities of .3, .6 and .1 respectively. The payoff values are in thousands of dollars. The management believes that the weather conditions significantly affect the level of demand. 48 monthly sales reports are randomly selected. These monthly sales reports showed 15 months with high demand, 28 months with medium demand, and 5 months with low demand. 12 of the 15 months with high demand had favorable weather conditions. 14 of the 28 months with medium demand had favorable weather conditions. Only 1 of the 5 months with low demand had favorable weather conditions. The management believes that the weather conditions significantly impact the level of demand and the estimated probabilities of poor weather conditions given different levels of demand is presented below. What is the probability of high demand given that the weather conditions are poor? A. .06 B. .44 C. .1364 D. .12 E. .1818 1-1877 Chapter 01 - An Introduction to Business Statistics 33. The alternatives 1 and 2 in the following payoff table represent the two possible manufacturing strategies that the EKA manufacturing company can adopt. The level of demand affects the success of both strategies. The states of nature (S1) represent the levels of demand for the company products. S1, S2 and S3 characterize high, medium and low demand with probabilities of .3, .6 and .1 respectively. The payoff values are in thousands of dollars. The management believes that the weather conditions significantly affect the level of demand. 48 monthly sales reports are randomly selected. These monthly sales reports showed 15 months with high demand, 28 months with medium demand, and 5 months with low demand. 12 of the 15 months with high demand had favorable weather conditions. 14 of the 28 months with medium demand had favorable weather conditions. Only 1 of the 5 months with low demand had favorable weather conditions. What is the maximum amount that the company would be willing to pay for perfect information? A. $95,000 B. $112,000 C. $7,000 D. $24,000 E. $17,000 34. An automobile insurance company is in the process of reviewing its policies. Currently drivers under the age of 25 have to pay a premium. The company is considering increasing the value of the premium charged to drivers under 25. According to company records, 35% of the insured drivers are under the age of 25. The company records also show that 280 of the 700 insured drivers under the age of 25 had been involved in at least one automobile accident. On the other hand, only 130 of the 1300 insured drivers 25 years or older had been involved in at least one automobile accident. An accident has just been reported. What is the probability that the insured driver is under the age of 25? A. 35% B. 20.5% C. 14% D. 68.3% E. 40% 1-1878 Chapter 01 - An Introduction to Business Statistics 35. An automobile insurance company is in the process of reviewing its policies. Currently drivers under the age of 25 have to pay a premium. The company is considering increasing the value of the premium charged to drivers under 25. According to company records, 35% of the insured drivers are under the age of 25. The company records also show that 280 of the 700 insured drivers under the age of 25 had been involved in at least one automobile accide...
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