Q1. Without the market study, what is the best decision? Q2.What is the best decision if they revive an unfavourable report? A group of medical professionals is considering the construction of a private clinic. If the medical demand ishigh (i.e., there is a favorable market for the clinic), the physicians could realize a net profit of $100,000. Ifthe market is not favorable, they could lose $40,000. Of course, they don't have to proceed at all, in whichcase there is no cost. In the absence of any market data, the physicians' best guess is that there is a 50-50chance the clinic will be successful.The physicians have been approached by a market research firm that offers to perform a study of the marketat a fee of $5,000. The market researchers claim their experience enables them to use Bayes' Theorem tomake the following statements of probability:Probability of a favorable market given a favorable study is 0.82;Probability of an unfavorable market given a favorable study is 0.18;Probability of a favorable market given an unfavorable study is 0.1089;Probability of an unfavorable market given a unfavorable study is 0.8911;Probability of a favorable study is 0.55;Probability of an unfavorable study is 0.45;Develop a decision tree for the medical professionals to analyze this problem. Use the EMV approach torecommend a strategy.

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Answered: Develop a decision tree for the medical…

Develop a decision tree for the medical professionals to analyze this problem. Use the EMV approach to recommend a strategy.

A First Course in Probability (10th Edition)

10th Edition

ISBN:9780134753119

Author:Sheldon Ross

Publisher:Sheldon Ross

Chapter1: Combinatorial Analysis

Section: Chapter Questions

Problem 1.1P: a. How many different 7-place license plates are possible if the first 2 places are for letters and...

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