Pick ONE of the two options...Option 1: Diminishing marginal utility holds that the additional utility decreases with each unit added. It is another example of the more general Law ofDiminishing Returns that we've seen in the Choice in a World of Scarcity section. Pick a good or service and explain how or why one would experiencediminishing marginal utility for this good or service. It may also help to explain over what time horizon you would experience this diminishing marginalutility.OR

One would experience diminishing marginal utility for a good or service over time as they became…

Answered: Pick ONE of the two options... Option…

Essentials Of Business Analytics

1st Edition

ISBN:9781285187273

Author:Camm, Jeff.

Publisher:Camm, Jeff.

Chapter11: Monte Carlo Simulation

Section: Chapter Questions

Problem 2P

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The following profit payoff table was presented in Problem 1: The probabilities for the states of nature are P(s1) = 0.65, P(s2) = 0.15, and P(s3) = 0.20. What is the optimal decision strategy if perfect information were available? What is the expected value for the decision strategy developed in part (a)? Using the expected value approach, what is the recommended decision without perfect information? What is its expected value? What is the expected value of perfect information?
Compute for the Modified Payback Period of opportunity #1. Compute for the Modified Payback Period of opportunity #2. Based on your computed modified payback periods, which opportunity is more favorable?
The following payoff table shows profit for a decision analysis problem with two decision alternatives and three states of nature: State of Nature Decision Alternative S1 S2 S3 d1 200 150 150 d2 250 150 100 The probabilities for the states of nature are P(s1) = 0.55, P(s2) = 0.25, and P(s3) = 0.2. (a) What is the optimal decision strategy if perfect information were available? S1 : S2 : S3 : (b) What is the expected value for the decision strategy developed in part (a)? If required, round your answer to one decimal place. (c) Using the expected value approach, what is the recommended decision without perfect information? What is its expected value? If required, round your answer to one decimal place. (d) What is the expected value of perfect information? If required, round your answer to one decimal place.
Q)Briefly explain whether the following statements is true or false In the Solow model, it is possible that a higher saving rate can reduce consumption in both the short run and the long run.
When comparing two mutually exclusive alternatives by the ROR method, if the rate of return on the alternative with the higher first cost is less than that of the lower first-cost alternative: (a) The rate of return on the increment between the two is greater than the rate of return for the lower first-cost alternative (b) The rate of return on the increment is less than the rate of return for the lower first-cost alternative (c) The higher first-cost alternative may be the better of the two alternatives (d) The lower first-cost alternative should be selected
Show by using equations or a diagram, that an expected utility maximizer requires a higher return for a riskier asset
e. IMPORTANT Note that from this example that a higher IRR for a nindividual alternative does not gurantee that the alternatvie is more economical than the one with a lower IRR. It is the incremental IRR value relative to the MARR that determines which alternative is more economical. The result of the incremental analysis are always the same as those of the PW,AW, or FW anaylsis
What happens if we wish to increase a constraint RHS value beyond the allowable increase/decrease shown in your sensitivity analysis? a.no effect on the optimal solution b.the problem should be solved again to find the new optimal solution c.there will no longer be a feasible solution for the problem. d.we can still use the dual price of the original problem to get the new optimal objective function value.
c. In the table above, two of the options are not priced correctly, i.e., are either more expensive or cheaper than what they should sell for. Which two? (Select all that apply) Mar call Apr call Oct call Mar put Oct put Apr put
What is the role that the required rate of return plays in the NPV model? In the IRR model?
Describe the advantages of using CAPM model to determine the expected return.
Designated market value : Group of answer choices A)is always the middle value of replacement cost, net realizable value, and net realizable value less a normal profit margin. B)should always be equal to net realizable value. C)may sometimes exceed net realizable value. D)should always be equal to net realizable value less a normal profit margin.

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