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What is the probability that the market professor will report a favorable study? 0.24 0.36 0.6 0.48 Question 15 What is the probability that a favorable market will occur, given a favorable study? 0.6 0.36 0.75 0.48 Question 16 How much might Jerry be willing to pay for a market study at most? Remember that Jerry can choose not t open the shop. $20,000 $16,000 $36,000 $14.000

What is the probability that the market professor will report a favorable study? 0.24 0.36 0.6 0.48 Question 15 What is the probability that a favorable market will occur, given a favorable study? 0.6 0.36 0.75 0.48 Question 16 How much might Jerry be willing to pay for a market study at most? Remember that Jerry can choose not t open the shop. $20,000 $16,000 $36,000 $14.000

Glencoe Algebra 1, Student Edition, 9780079039897, 0079039898, 2018
Glencoe Algebra 1, Student Edition, 9780079039897, 0079039898, 2018
18th Edition
ISBN:9780079039897
Author:Carter
Publisher:Carter
Chapter10: Statistics
Section: Chapter Questions
Problem 19SGR
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Jerry Smith is thinking about opening a bicycle shop. Jerry loves to go on 50-mile rides, but Jerry believes that any small business should be started only if there is a good chance of making a profit. Jerry can open a small shop, a large shop, or no shop at all. The profits will depend on the size of the shop and on whether the market is favorable or unfavorable for the products in the shop. Because there will be a 5-year lease on the building that Jerry is thinking about using, Jerry wants to make sure that the correct decision is made. Jerry is also thinking about hiring a marketing professor to conduct a marketing research study. If the study is conducted, the study could be favorable (i.e., predicting a favorable market) or unfavorable (i.e., predicting an unfavorable market). Jerry Smith has done some analysis about the profitability of the bicycle shop. If Jerry builds the large bicycle shop, Jerry will earn $60,000 if the market is favorable, but Jerry will lose $40,000 if the market is unfavorable. The small shop will return a $30,000 profit in a favorable market and a $10,000 loss in an unfavorable market. At the present time, Jerry believes that there is a 60% chance that the market will be favorable. The marketing professor charges Jerry $3,000 for the marketing research. The marketing professor showed their market research quality as the following data: 60% of their studies reported a favorable market when the market was favorable; 70% of their studies reported an unfavorable market when the market was unfavorable.
Transcribed Image Text:Jerry Smith is thinking about opening a bicycle shop. Jerry loves to go on 50-mile rides, but Jerry believes that any small business should be started only if there is a good chance of making a profit. Jerry can open a small shop, a large shop, or no shop at all. The profits will depend on the size of the shop and on whether the market is favorable or unfavorable for the products in the shop. Because there will be a 5-year lease on the building that Jerry is thinking about using, Jerry wants to make sure that the correct decision is made. Jerry is also thinking about hiring a marketing professor to conduct a marketing research study. If the study is conducted, the study could be favorable (i.e., predicting a favorable market) or unfavorable (i.e., predicting an unfavorable market). Jerry Smith has done some analysis about the profitability of the bicycle shop. If Jerry builds the large bicycle shop, Jerry will earn $60,000 if the market is favorable, but Jerry will lose $40,000 if the market is unfavorable. The small shop will return a $30,000 profit in a favorable market and a $10,000 loss in an unfavorable market. At the present time, Jerry believes that there is a 60% chance that the market will be favorable. The marketing professor charges Jerry $3,000 for the marketing research. The marketing professor showed their market research quality as the following data: 60% of their studies reported a favorable market when the market was favorable; 70% of their studies reported an unfavorable market when the market was unfavorable.
What is the probability that the market professor will report a favorable study? 0.24 0.36 0.6 0.48 Question 15 What is the probability that a favorable market will occur, given a favorable study? 0.6 0.36 0.75 0.48 Question 16 How much might Jerry be willing to pay for a market study at most? Remember that Jerry can choose not to open the shop. $20,000 $16,000 $36,000 $14,000
Transcribed Image Text:What is the probability that the market professor will report a favorable study? 0.24 0.36 0.6 0.48 Question 15 What is the probability that a favorable market will occur, given a favorable study? 0.6 0.36 0.75 0.48 Question 16 How much might Jerry be willing to pay for a market study at most? Remember that Jerry can choose not to open the shop. $20,000 $16,000 $36,000 $14,000
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