Problem 4:Heidi manages a firm that is going to start operating in a new market. She has the option oftargeting either "high end" consumers or "low end" consumers. She has some uncertaintyregarding actual market conditions in each of these two segments. Very loosely, she thinks thatmarket conditions in each segment could be either "favorable" or "unfavorable." Theprobability of "favorable" versus "unfavorable" conditions in each market segment (along withher resulting profit in each case) is:MarketHigh endLow end3b. If p= and q==/²/²4q1-qa. Draw the decision tree for this decision problem.ConditionFavorableUnfavorableFavorableUnfavorablec. Suppose p=Probabilityр1-pd. Suppose q=Profit$800,000$200,000$500,000$400,000p=²/1.fFor what range of q should she serve the "low end" consumers?Which segment should she serve? Explain.3For what range of p should she serve the "low end" consumers?4

Answered: Heidi manages a firm that is going to…

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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Charlie buys a one-year term home insurance policy for $p, that will pay $200,000 in the event of a major catastrophe and $35,000 in the event of a minor catastrophe. Charlie's home has a 0.2% chance of a major catastrophe and a 0.7% of a minor catastrophe during the one year term. What did the insurance company charge Charlie for this policy if the company expected to break even?
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Please do question 1f and 1g handwritten
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The proprietor of Midland Construction Company has to decide between two projects. He estimates that the first project will yield a profit of $160,000 with a probability of 0.7 or a profit of $120,000 with a probability of 0.3; the second project will yield a profit of $220,000 with a probability of 0.6 or a profit of $70,000 with a probability of 0.4.Find the expected profit for each project. first project $ second project $ Which project should the proprietor choose if he wants to maximize his expected profit? first project second project
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