Sonia is planning to start a new designer cloth shop. Her problem is to decide how large her shop should be. The annual returns will depend on both the size of her shop and a number of marketing factors related to the current market conditions and demand for designer wear. After a careful analysis, Sonia came up with the following table: Size of shop good market (R.O) fair market (R.O) poor market (R.O) Samll scale 1024 9765 -500 Medium scale 1500 3000 -2000 Large scale 2000 3000 -4000 Very large scale 3000 5000 -7000 a)what will be her decision based on Pessimist criteria? b) what will be her decision based on Optimistic criteria? c) what will be her decision based on Laplace criteria?
Sonia is planning to start a new designer cloth shop. Her problem is to decide how large her shop should be. The annual returns will depend on both the size of her shop and a number of marketing factors related to the current market conditions and demand for designer wear. After a careful analysis, Sonia came up with the following table: Size of shop good market (R.O) fair market (R.O) poor market (R.O) Samll scale 1024 9765 -500 Medium scale 1500 3000 -2000 Large scale 2000 3000 -4000 Very large scale 3000 5000 -7000 a)what will be her decision based on Pessimist criteria? b) what will be her decision based on Optimistic criteria? c) what will be her decision based on Laplace criteria?
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Sonia is planning to start a new designer cloth shop. Her problem is to decide how large her shop should be. The annual returns will depend on both the size of her shop and a number of marketing factors related to the current market conditions and demand for designer wear. After a careful analysis, Sonia came up with the following table:
| Size of shop | good market (R.O) | fair market (R.O) | poor market (R.O) |
| Samll scale | 1024 | 9765 | -500 |
| Medium scale | 1500 | 3000 | -2000 |
| Large scale | 2000 | 3000 | -4000 |
| Very large scale | 3000 | 5000 | -7000 |
a)what will be her decision based on Pessimist criteria?
b) what will be her decision based on Optimistic criteria?
c) what will be her decision based on Laplace criteria?
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