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- A real estate developer must decide on a plan for developing a certain piece of property. After careful consideration, the developer has two acceptable alternatives: residential proposal or commercial proposal. The main factor or state of nature that will influence the profitability of the development is whether or not a shopping center is built close by and the size of the shopping center. There is a 20% chance of no center being built, a 50% chance of a medium shopping center built, and a 30% chance of a large shopping center.
- If the developer selects the residential proposal and no center is built, he has a further set of options: do nothing $400,000 payoff; build a small shopping center himself $700,000 payoff; or put in a park resulting in $800,000 payoff. Should a medium shopping center be built nearby, his payoff for residential would be $1,600,000 and large shopping center results in a $1,200,000 payoff.
- If the developer selects the commercial proposal and no center is built, he also has the set of options: do nothing but payoff would be $-50,000; build a small shopping center himself for $1,400,000 payoff; or put in a park resulting in $1,000,000 payoff. Should a medium shopping center be built nearby, his payoff for commercial would be $400,000 and large shopping center results in a $1,500,000 payoff.
b. Determine the EMV for the problem and identify the best decision.
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- the probability of reaching the wrong conclusion to 0.05 the probability of a Type II error equal to 0.05 the probability of reaching the correct conclusion equal to 0.05 the probability of a Type I error equal to 0.05 attached in ss below thanksThe owner of Tastee Cookies needs to decide whether to lease a small, medium, or large new retail outlet. She estimates that monthly profits will vary with demand for her cookies as follows: SIZE OFOUTLET DEMAND LOW HIGH Small $ 1,000 1,000 Medium 500 2,500 Large 0 3,000 For what range of probability that demand will be high, will she decide to lease the medium facility?VD A national sports network offers a community a chance to join a pro team The winner of the tryouts takes home the prize but the others (losers) gain nothing. There are 10 persons in the village that could tryout. Each person will decide to join the game if the expected value of the game is higher than $40,000. This type of problem is often called “the winner takes all.” Hint: complete the table first. Expected value of tryout = (Prize of the tryout) / (number of persons trying out) = expected prize Income to the community = prize money + income of all persons who did not try out Number of contestants prize if tryout is held Income to a person if they stay at home Expected prize for a person Income of persons who did not tryout Total Income to the community 0 $0.00 $40,000 $0 $400,000 $400,000 1 $180,000.00 $40,000 $180,000 $360,000 $540,000 2 $190,000.00 $40,000 3 $205,000.00 $40,000 4…
- Using the normal table or software, find the value of z that makes the following probabilities true. You might find it helpful to draw a picture to check your answers (a) P(Zz) =0.01 (e) P(Z|The table below shows that a sales agent can work with either low, or high amount of effort. Low effort generates$30,000, $60,000 or $100,000 profit (with probability given below), while high effort generates 60,000; 100,000 or 150, 000 (with probability given below) depending on some random factors. Bad luck (P=0.3) Medium luck (P=0.3) Good luck (P=0.4) Low effort (a=0) $30,000 $60,000 $100,000 High effort (a=1) $60,000 $100,000 $150,000 The cost of low effort is 0 and the cost of high effort is $10,000 (Formally, c=$10,000a). The net wage is wage minus cost of effort and the net profit is total profit minus wage. Suppose the firm offers the repair person a fixed wage of 13,000, what will be the net wage of the repair person and the net profit of the owner? Suppose now the owner offers the repair person the following bonus arrangement What will be the net wage of the repair person? What will be the net profit of the owner? Specify…If the farmer uses pesticides he expects a crop of 60,000 bushels; if he does not use pesticides he expects a crop of 50,000 bushels. The cost of pesticides is $30,000 and the other costs associated with planting and harvesting the crop total $450,000. The price of corn at harvest time will either be $9.00 with probability of 0.50 or it will be $11.00 with probability 0.50, so if the farmer decides to sell the crop at harvest, the expected price per bushel that he will receive is $10.00. If the farmer does not use pesticides and decides to sell the crop at harvest, what is his expected profit? a. $180,000.00 b. $100,000.00 c. $50,000.00 d. $20,000.00 If the farmer uses pesticides he expects a crop of 60,000 bushels; if he does not use pesticides he expects a crop of 50,000 bushels. The cost of pesticides is $30,000 and the other costs associated with planting and harvesting the crop total $450,000. The price of corn at harvest time will either…If the farmer uses pesticides he expects a crop of 60,000 bushels; if he does not use pesticides he expects a crop of 50,000 bushels. The cost of pesticides is $30,000 and the other costs associated with planting and harvesting the crop total $450,000. The price of corn at harvest time will either be $9.00 with probability of 0.50 or it will be $11.00 with probability 0.50, so if the farmer decides to sell the crop at harvest, the expected price per bushel that he will receive is $10.00. The corn farmer is considering two alternatives for selling his crop. The first is a contract where he can sell the rights to the future crop at planting. The second is to sell the crop after harvest. What is the maximum a purchaser would be willing to pay to the farmer for the rights to the future corn crop assuming they cannot monitor the farmer after purchasing the contract? a. $600,000.00 b. $550,000.00. c. $500,000.00 d. $540,000.00If the farmer uses pesticides he expects a crop of 60,000 bushels; if he does not use pesticides he expects a crop of 50,000 bushels. The cost of pesticides is $30,000 and the other costs associated with planting and harvesting the crop total $450,000. The price of corn at harvest time will either be $9.00 with probability of 0.50 or it will be $11.00 with probability 0.50, so if the farmer decides to sell the crop at harvest, the expected price per bushel that he will receive is $10.00. If the farmer decides to sell the crop at harvest, then: a. He should not use pesticides because not using pesticides ensures greater expected profit. b. He should not use pesticides because not using pesticides ensures lower expected profit. c. He should use pesticides because using pesticides ensures greater expected profit. d. He should use pesticides because using pesticides ensures lower expected profit.If the farmer uses pesticides he expects a crop of 60,000 bushels; if he does not use pesticides he expects a crop of 55,000 bushels. The cost of pesticides is $20,000 and the other costs associated with planting and harvesting the crop total $450,000. The price of corn at harvest time will either be $10.00 with probability of 0.50 or it will be $12.00 with probability 0.50, so if the farmer decides to sell the crop at harvest, the expected price per bushel that he will receive is $11.00. If the farmer uses pesticide and decides to sell the crop at harvest, what is his expected revenue? a. $720,000.00 b. $600,000.00 c. $605,000.00 d. $660,000.00If the farmer uses pesticides he expects a crop of 60,000 bushels; if he does not use pesticides he expects a crop of 55,000 bushels. The cost of pesticides is $20,000 and the other costs associated with planting and harvesting the crop total $450,000. The price of corn at harvest time will either be $10.00 with probability of 0.50 or it will be $12.00 with probability 0.50, so if the farmer decides to sell the crop at harvest, the expected price per bushel that he will receive is $11.00. If the farmer uses pesticide and decides to sell the crop at harvest, what is his expected profit? a. $135,000.00 b. $250,000.00 c. $210,000.00 d. $190,000.00 If the farmer uses pesticides he expects a crop of 60,000 bushels; if he does not use pesticides he expects a crop of 55,000 bushels. The cost of pesticides is $20,000 and the other costs associated with planting and harvesting the crop total $450,000. The price of corn at harvest time will either be…Venus Flycatcher Company sells exotic plants and is trying to decide which of two hybrid plants to introduce into their product line. Probabilities Hybrid/Demand Hybrid 1 Hybrid 2 $1,000 $1,500 $2,000 .2 $3,000 Low -10,000 -15,000 .3 Demand Medium 10,000 10,000 .5 High What is the most that Venus would pay for a highly reliable demand forecast? 30,000 35,000A bakery would like you to recommend how many loaves of its famous marble rye bread to bake at the beginning of the day. Each loaf costs the bakery $2.00 and can be sold for $7.00. Leftover loaves at the end of each day are donated to charity. Research has shown that the probabilities for demands of 25, 50, and 75 loaves are 30%, 20%, and 50%, respectively. Make a recommendation for the bakery to bake 25, 50, or 75 loaves each morning. Find the expected monetary value when baking 25 loaves. EMV=$(Type an integer or a decimal.) Find the expected monetary value when baking 50 loaves. EMV = $(Type an integer or a decimal.) Find the expected monetary value when baking 75 loaves. EMV = $ (Type an integer or a decimal.) Make a recommendation for the bakery to bake 25, 50, or 75 loaves each morning. The bakery should bake loaves of bread every morning. O 25 50 75 ESEE MORE QUESTIONS