TABLE 17-6
a Student Wanted to Find Out the Optimal

question 81

Short Answer

TABLE 17-6
A student wanted to find out the optimal strategy to study for a Business Statistics exam. He constructed the following payoff table based on the average amount of time he needed to put in every week studying for the course and the degree of difficulty of the exam. From the information that he gathered from students who had taken the course, he concluded that there was a 40% probability that the exam would be easy.
$$\begin{array} { | l | c | c | c | } \hline & \text { 16 hours } & 8 \text { hours } & \text { 4 hours } \\\hline \text { Easy Exam } & 40 & 60 & 80 \\\hline \text { Difficult Exam } & 100 & 50 & 0 \\\hline\end{array}$$
-Referring to Table 17-6, what is the opportunity loss of spending 16 hours per week on average studying for the exam when the exam turns out to be easy?

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Definitions:

Point Estimate

A single value given as an estimate of a population parameter, often derived from sample data.

Population Parameter

A numerical value that characterizes a given population, such as mean or standard deviation.

Sample Statistic

A numerical measure calculated from a sample data set used to estimate characteristics of the population from which it is drawn.

Unbiased Estimator

A statistical estimator that, on average, accurately estimates the parameter of interest.