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Sal De Carlo is the manager for food sales for Coyote Stadium. For each home game, Sal must decide how many hot dogs to have available for sale. The number of hot dogs sold depends on the game's attendance. Sal pays $75 for

Sal De Carlo is the manager for food sales for Coyote Stadium. For each home game, Sal must decide how many hot dogs to have available for sale. The number of hot dogs sold depends on the game's attendance. Sal pays $75 for

ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Please do subsection A-C
Sal De Carlo is the manager for food sales for Coyote Stadium. For each home game, Sal must decide how many hot dogs to have available for sale. The number of hot dogs sold depends on the game's attendance. Sal pays $75 for each hot dog and $15 for each hot dog bun. Hot dogs are sold to fans during the game for $175. Any leftover hot dogs are sold to the men's dorms for $25 apiece. Sal estimates that demand for hot dogs for next week's game will be 10,000, 15,000, 20,000, or 25,000. Suppose that Sal has assigned the probabilities shown here for the different demand levels: Demand 10,000 15,000 20,000 25,000 Probability 0.20 0.25 0.30 0.25 a. Set up the payoff table for Sal's decision concerning the number of hot dogs to order. b. What are the expected values for each decision that Sal can make? c. How much would Sal be willing to pay for perfect information about the number of hot dogs that will be demanded during next week's game?
Transcribed Image Text:Sal De Carlo is the manager for food sales for Coyote Stadium. For each home game, Sal must decide how many hot dogs to have available for sale. The number of hot dogs sold depends on the game's attendance. Sal pays $75 for each hot dog and $15 for each hot dog bun. Hot dogs are sold to fans during the game for $175. Any leftover hot dogs are sold to the men's dorms for $25 apiece. Sal estimates that demand for hot dogs for next week's game will be 10,000, 15,000, 20,000, or 25,000. Suppose that Sal has assigned the probabilities shown here for the different demand levels: Demand 10,000 15,000 20,000 25,000 Probability 0.20 0.25 0.30 0.25 a. Set up the payoff table for Sal's decision concerning the number of hot dogs to order. b. What are the expected values for each decision that Sal can make? c. How much would Sal be willing to pay for perfect information about the number of hot dogs that will be demanded during next week's game?
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