An investor is to purchase one of three types of real estate, as illustrated in Figure below. Th investor must decide among an apartment building, an office building, and a warehouse. The future states of nature that will determine how much profit the investor will make are good economic conditions and poor economic conditions. The profits that will result from each decision in the event of each state of nature are shown in Table below: States of Nature Decision GOOD ECONOMIC PoOR ECONOMIC /Durchase) CONDITIONS CONDITIONS
An investor is to purchase one of three types of real estate, as illustrated in Figure below. Th investor must decide among an apartment building, an office building, and a warehouse. The future states of nature that will determine how much profit the investor will make are good economic conditions and poor economic conditions. The profits that will result from each decision in the event of each state of nature are shown in Table below: States of Nature Decision GOOD ECONOMIC PoOR ECONOMIC /Durchase) CONDITIONS CONDITIONS
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
Related questions
Question
![An investor is to purchase one of three types of real estate, as illustrated in Figure below. The
investor must decide among an apartment building, an office building, and a warehouse. The
future states of nature that will determine how much profit the investor will make are good
economic conditions and poor economic conditions. The profits that will result from each
decision in the event of each state of nature are shown in Table below:
States of Nature
Decision
GoOD ECONOMIC
PoOR ECONOMIC
(Purchase)
CONDITIONS
CONDITIONS
$ 50,000
S 30,000
Apartment building
Office building
100,000
- 40,000
Warehouse
30,000
10,000
a) Find the optimal act using Maxi-Max criteria
b) Find the optimal act using Mini-Max criteria
c) Find the optimal act using Maxi-Min criteria
d)
Find the optimal act using Min-Max regret table
26°C Clear
1O](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fd38207d4-6ced-4d05-8afd-bfb5ec38ee10%2F878132e4-780b-4de2-b38e-6fc7b29b0265%2Ff2x0yai_processed.jpeg&w=3840&q=75)
Transcribed Image Text:An investor is to purchase one of three types of real estate, as illustrated in Figure below. The
investor must decide among an apartment building, an office building, and a warehouse. The
future states of nature that will determine how much profit the investor will make are good
economic conditions and poor economic conditions. The profits that will result from each
decision in the event of each state of nature are shown in Table below:
States of Nature
Decision
GoOD ECONOMIC
PoOR ECONOMIC
(Purchase)
CONDITIONS
CONDITIONS
$ 50,000
S 30,000
Apartment building
Office building
100,000
- 40,000
Warehouse
30,000
10,000
a) Find the optimal act using Maxi-Max criteria
b) Find the optimal act using Mini-Max criteria
c) Find the optimal act using Maxi-Min criteria
d)
Find the optimal act using Min-Max regret table
26°C Clear
1O
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