10:07 AM3. The Miramar Company is going to introduce one of three new products: a widget,a hummer, or a nimnot. The market conditions (favorable, stable, or unfavorable)will determine the profit or loss the company realizes, as shown in the followingpayoff table:Market ConditionsFavorableStableUnfavorableProduct.2.7.1Widget$120,000$70,000$-30,00020,00030,000Hummer60,00040,000Nimnot35,00030,000a. Compute the expected value for each decision and select the best one.b. Develop the opportunity loss table and compute the expected opportunity loss foreach product.c. Determine how much the firm would be willing to pay to a market research firm togain better information about future market conditions.d. The Miramar Company is considering contracting with a market research firm to do asurvey to determine future market conditions. The results of the survey will indicateeither positive or negative market conditions. There is a 0.60 probability of a positivereport, given favorable conditions; a 0,30 probability of a positive report, given stableconditions; and a 0.10 probability of a positive report, given unfavorable conditions.There is a 0.90 probability of a negative report, given unfavorable conditions; a 0.70probability, given stable conditions; and a 0.40 probability, given favorableconditions. Using decision tree analysis and posterior probability tables, determinethe decision strategy the company should follow, the expected value of the strategy,and the maximum amount the company should pay the market research firm for thesurvey results.

It is the sum of all possible values of a variable multiplied by its probability of occurrence. We…

a. Compute the expected value for each decision and select the best one. b. Develop the opportunity loss table and compute the expected opportunity loss for each product. c. Determine how much the firm would be willing to pay to a market research firm to gain better information about future market conditions.

a. Compute the expected value for each decision and select the best one. b. Develop the opportunity loss table and compute the expected opportunity loss for each product. c. Determine how much the firm would be willing to pay to a market research firm to gain better information about future market conditions.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Similar questions

When Target charges $96 for a children's game, they sell 100 units. When they charge $85, they sell 120 units. If they were to give away the game for free, how many units (Q) would be demanded? (Answer is NOT infinity) Enter as a value. ROUND TO THE NEAREST WHOLE NUMBER.
A company markets two products. The quantities of these two products are x and y. Both products are priced at $60 and the productive capacity for both products together is 30. The total cost of the firm is C (x, y) = x² + xy + y². Find the production levels of x and y which maximize profit. What is the maximum profit? Prove that profit is maximized.
Explain why each of the following statements is True, False, or Uncertain according to economic principles. Use diagrams where appropriate. Unsupported answers will receive no marks. It is the explanation that is important. If a Prof leaves their $100,000 per year job to start a business that earns annual revenue $400,000, and has annual labour and rental costs of $200,000, the economic profit of the business is $200,000.
(A) Suppose that the two firms merge. Write down the profit function of the merged firm. Calculate the profit maximizing level of output, the amount of pollution for the merged firm, and its profit. Is the merger Pareto improvement? Why or why not? (B) Suppose that the merger is forbidden by the government. Instead, now the fishery has the property right to water. In other words, anybody who wants to pollute the water needs to buy a pollution right from the fishery. Let the price of the pollution right be Px. Write down the steel mill’s new profit function and the fishery’s new profit function. (C) Calculate the profit maximizing level of output for each firm, the amount of pollution, and the price of pollution right. please, please answer the three questions together..
b) Besides profit maximization, an Islamic firm (Muslim Entrepreneur) is supposed to take into account the welfare of the society in his business decision. Elaborate on the statement.
Describe the benefits of an auction to thebuyer and the seller.
Efficiency in a market occurs where: a) + Marginal benefits = 0 b) € Marginal costs = c) + Total costs = total benefitse d) Marginal costs = marginal benefitse
Tom is a retail manager who's training one of his seasoned salespeople on the features and benefits of a new product the company will be carrying. What training method is Tom using? A. Behavior modeling B. Role rotation C. In-basket technique D. On-the-job training Give justification for your answer
Is it fair to deem some activities virtuous and others not in an imperfect market? Please provide the source of the Information and explain in detail
Part d and e
Suppose that there are two fancy hotels on the online booking platform, say W hotel and Ritz Carlton hotel. Each hotel has the capacity of 20 rooms on the New Year Eve. There are 20 families who are planning to stay at Bay Areas. Suppose that you are the manager and you set the price to maximize the hotel profit. The marginal cost of each hotel room = 500 RMB The largest valuation on the hotel room = 2000 RMB valuation decrease by 100RMS. In total, there are 20 families. Discuss with your peers how many rooms you will offer in the market.
Which of the following is an element of the (supply chain )? a sourcing b manufacturing C distribution . d all of the above