Problems 35-40 refer to the matrices in Problems 29-34. Use the limiting matrix P found for each transition matrix P in Problems 29-34 to determine the long-run behavior of the successive state matrices for the indicated initial-state matrices. For matrix P from Problem 34 with A S 0 = 0 0 0 1 B S 0 = 0 0 1 0 C S 0 = 0 0 .4 .6 D S 0 = .1 .2 .3 .4
Problems 35-40 refer to the matrices in Problems 29-34. Use the limiting matrix P found for each transition matrix P in Problems 29-34 to determine the long-run behavior of the successive state matrices for the indicated initial-state matrices. For matrix P from Problem 34 with A S 0 = 0 0 0 1 B S 0 = 0 0 1 0 C S 0 = 0 0 .4 .6 D S 0 = .1 .2 .3 .4
Solution Summary: The author calculates the long-run behavior of the successive state matrices if the limiting matrix is l
Problems 35-40 refer to the matrices in Problems 29-34. Use the limiting matrix
P
found for each transition matrix
P
in Problems 29-34 to determine the long-run behavior of the successive state matrices for the indicated initial-state matrices.
For matrix
P
from Problem 34 with
A
S
0
=
0
0
0
1
B
S
0
=
0
0
1
0
C
S
0
=
0
0
.4
.6
D
S
0
=
.1
.2
.3
.4
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The graph below shows the U.S. federal expenses for 2012.
A) estimate the fraction of the total expenses that were spent on Medicare. Write your answer as the
closest fraction whose denominator is 100.
B) estimate the fraction of the total expenses that were spent on Medicare and Medicaid. Write your
answer as the closest fraction, whose denominator is 100.
Starting with the finished version of Example 6.2, attached, change the decision criterion to "maximize expected utility," using an exponential utility function with risk tolerance $5,000,000. Display certainty equivalents on the tree.
a. Keep doubling the risk tolerance until the company's best strategy is the same as with the EMV criterion—continue with development and then market if successful.
The risk tolerance must reach $ ____________ before the risk averse company acts the same as the EMV-maximizing company.
b. With a risk tolerance of $320,000,000, the company views the optimal strategy as equivalent to receiving a sure $____________ , even though the EMV from the original strategy (with no risk tolerance) is $ ___________ .
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