There Are Three Equally Likely States of Nature (High, Medium

question 60

Multiple Choice

There are three equally likely states of nature (High, Medium, and Low demand) . If the large factory will post profits of $50,000, $25,000, and - $10,000 under these states of nature, respectively, what is the EMV of the factory?

• A) $50,000
• B) $25,000
• C) $28,333.33
• D) $21,666.67
• E) $2,166.67

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Definitions:

Tractors

Agricultural machinery used for plowing, tilling, planting, and similar tasks in farming, essential for modern agriculture.

Comparative Advantage

The ability of an entity to produce a particular good or service at a lower opportunity cost than another, supporting the basis for beneficial trade.

Microchips

Small semiconductor devices containing electrical circuits that can perform calculations or store data, used in electronic devices.

Tires

Rubber-covered, air-filled cylindrical components that provide vehicles with traction and support.