A farmer in Iowa is considering either leasing some extra land or investing in savings certificates at the local bank. If weather conditions are good next year, the extra land will give the farmer an excellent harvest. However, if weather conditions are bad, the farmer will lose money. The savings certificates will result in the same return, regardless of the weather conditions. The return for each investment, given each type of weather condition, is shown in the following payoff table: Weather Decision Good Bad Lease land $90,000 $-40,000 Buy savings certificate 10,000 10,000 Select the best decision, using the following decision criteria: a. Maximax b. Maximin
A farmer in Iowa is considering either leasing some extra land or investing in savings certificates
at the local bank. If weather conditions are good next year, the extra land will give the farmer an
excellent harvest. However, if weather conditions are bad, the farmer will lose money. The savings
certificates will result in the same return, regardless of the weather conditions. The
investment
Weather
Decision Good Bad
Lease land $90,000 $-40,000
Buy savings certificate 10,000 10,000
Select the best decision, using the following decision criteria:
a. Maximax
b. Maximin
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