Dillon DeMarco is considering opening a small Italian bakery in the nearby mall, close to the Italian section of the city. He has chosen a good location where he believesthere will be interest in the bakery. However, Dillon is unsure how much interest there will be and is trying to decide whether to open a small, medium or large shop. Itreally depends on what the economy is like in the next year whether people are able to spend their money on his Italian delicacies. Based on the latest financial reports,there is a 20% probability for a strong economy, 50 % probability for an average economy and 30% probability for a bad economy. The potential payoffs for a small,medium or large shop for a given year are shown in the decision table.AlternativesSmall ShopMedium ShopLarge ShopProbabilitiesAnswerCalculate the Expected Monetary Values (EMV) for each alternative.EMVDecision TableStrong Economy25,00050,00075,0000.20EMV(small shop) = $EMV (medium shop) = $(large shop) = $State of NatureAverage Economy16,00050,00062,0000.50Bad Economy30,00045,00055,5000.30TablesKeypadKeyboard Shortcuts

The question is about decision theory.Given :

Answered: Dillon DeMarco is considering opening a…

MATLAB: An Introduction with Applications

6th Edition

ISBN:9781119256830

Author:Amos Gilat

Publisher:Amos Gilat

Chapter1: Starting With Matlab

Section: Chapter Questions

Problem 1P

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You’re travelling on the Pan-American Highway from Mexico into the United States and trying to decide whether to fill your petrol tank before or after crossing the border. One liter of petrol costs 15 Mexican pesos in Nuevo Laredo, Mexico, and one gallon of petrol costs 2.20 U.S. dollars in Laredo, Texas. If one U.S. dollar is worth 20 Mexican pesos, calculate the cost of petrol in Mexico in U.S. dollars per gallon. To answer this question express your numerical answer to 2 decimal places.
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Sara is a 57-year-old graphic designer who wants to retire 5 years from now. She earns $54,000/year and does not expect any raises if she stays in her job. Her daughter has told her about a new job opportunity that would offer a much higher salary, but to become eligible Sara would need to quit her job and spend a year taking classes. If she did that, next year she would earn $0 and pay $42,000 in tuition, and then she would earn $81,000/year for the final 4 years of her career. Sara likes the duties of the two jobs equally well, so this is strictly a financial issue for her. The interest rate is r. Question: How will she decide? Write down the calculation she will make. Would she be more likely to change jobs if the interest rate were higher or lower?
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