#1. A firm has three investment alternatives. Pay offs are in thousands of dollars. Economic ConditionsDecision Alternatives Up, s1 Stable, s2 Down, S3Investment A, d1 100 25 0Investment B, d2 75 50 25Investment C, d3 50 50 50Probabilities 0.40 0.30 0.30 Indifference Probability (p)Profit Decision Maker A Decision Maker B$75,000 0.80 0.60$50,000 0.60 0.30$25,000 0.30 0.15 a. What is the utility of a payoff of 75 for decision maker A?b. What is the utility of a payoff of 50 for decision maker A?c. What is the utility of a payoff of 25 for decision maker A?
Contingency Table
A contingency table can be defined as the visual representation of the relationship between two or more categorical variables that can be evaluated and registered. It is a categorical version of the scatterplot, which is used to investigate the linear relationship between two variables. A contingency table is indeed a type of frequency distribution table that displays two variables at the same time.
Binomial Distribution
Binomial is an algebraic expression of the sum or the difference of two terms. Before knowing about binomial distribution, we must know about the binomial theorem.
#1. A firm has three investment alternatives. Pay offs are in thousands of dollars.
Economic Conditions
Decision Alternatives Up, s1 Stable, s2 Down, S3
Investment A, d1 100 25 0
Investment B, d2 75 50 25
Investment C, d3 50 50 50
Probabilities 0.40 0.30 0.30
Indifference
Profit Decision Maker A Decision Maker B
$75,000 0.80 0.60
$50,000 0.60 0.30
$25,000 0.30 0.15
a. What is the utility of a payoff of 75 for decision maker A?
b. What is the utility of a payoff of 50 for decision maker A?
c. What is the utility of a payoff of 25 for decision maker A?
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