EJ has plans to open some pizza restaurants, but he is not sure how many to open. He has prepared a payoff table to help analyze the situation. ALTERNATIVE HIGH DEMAND LOW DEMAND Open 2 400,000 -250,000 Open 1 50,000 -20,000 Do Nothing 0 0 EJ decided to use the criterion of realism in his analysis. For what range of value of α will EJ decide to do nothing? to open 1 restaurant? to open 2 restaurants?
EJ has plans to open some pizza restaurants, but he is not sure how many to open. He has prepared a payoff table to help analyze the situation. ALTERNATIVE HIGH DEMAND LOW DEMAND Open 2 400,000 -250,000 Open 1 50,000 -20,000 Do Nothing 0 0 EJ decided to use the criterion of realism in his analysis. For what range of value of α will EJ decide to do nothing? to open 1 restaurant? to open 2 restaurants?
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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EJ has plans to open some pizza restaurants, but he is not sure how many to open. He has prepared a payoff table to help analyze the situation.
ALTERNATIVE |
HIGH |
LOW DEMAND |
Open 2 |
400,000 |
-250,000 |
Open 1 |
50,000 |
-20,000 |
Do Nothing |
0 |
0 |
EJ decided to use the criterion of realism in his analysis. For what range of value of α will EJ decide to do nothing? to open 1 restaurant? to open 2 restaurants?
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