TABLE 17-1
the Following Payoff Table Shows Profits Associated with a Set

question 98

Multiple Choice

TABLE 17-1
The following payoff table shows profits associated with a set of 3 alternatives under 2 possible states of nature.
$\begin{array}{llcc} \text {States } &\text { A1 }&\text { A2 }&\text {A3 }\\\hline1&12&-2&8\\2&4&10&5\end{array}$


$\text {where:}$$\quad$$\quad$ $\text {S1 is state of nature 1 }$$\quad$$\text {A1 is action alternative 1}$
$\quad$$\quad$$\quad$$\quad$$\quad$$\text {S2 is state of nature 2}$$\quad$$\text { A2is action alternative 2}$
$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\text {A3 is action alternative3 }$
-Referring to Table 17-1, if the probability of S1 is 0.2, what is the optimal alternative using EOL?

• A) A2
• B) A3
• C) A1
• D) It cannot be determined.

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Definitions:

Roses

A type of flowering shrub of the genus Rosa, known for its beauty, fragrance, and cultural significance in many societies.

Total Surplus

The sum of consumer surplus and producer surplus, representing the total benefits to society from the production and consumption of goods and services.

Trade

The exchange of goods and services between people or entities.

Total Surplus

The sum of consumer surplus and producer surplus in a market, reflecting the total net benefit to society from the production and consumption of goods and services.