You Are Evaluating Investment Alternatives for a Ski Resort If You Use the EMV Criterion, the Probability That the Four

question 49

Multiple Choice

You are evaluating investment alternatives for a ski resort.There are four alternative investments and their payoffs (in $10,000s) are shown in the following table, depending on the snow conditions for the next season. $\begin{array}{r}\text { Snow Conditions }\\\begin{array}{ccc}\text { Investment } & \text { Good } & \text { Bad } \\d_{1} & 3 & 1 \\d_{2} & 8 & 0 \\d_{3} & 12 & -4 \\d_{4} & 18 & -12\end{array}\end{array}$
If you use the EMV criterion, the probability that the snow conditions are good is p, and you decide investment d₃, what is the expected value of perfect information?

• A)12p + 3
• B)2p + 3
• C)p + 35
• D)p + 2
• E)p + 1

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Definitions:

Dalit

A term for individuals belonging to the lowest caste in India, historically subjected to discrimination and social exclusion.

Sudras

Sudras represent the fourth and lowest class in the traditional Hindu social hierarchy, traditionally tasked with serving the other three classes.

Hindu Castes

A traditional system of hierarchical social stratification in Hindu society, dividing people into categories based on inherited status and profession.

Parallel Cousins

The children of a father's brother or a mother's sister, considered in some cultures to be nearly as closely related as siblings.