Exhibit 21-2 Below You Are Given a Payoff Table Involving Three States

question 30

Multiple Choice

Exhibit 21-2
Below you are given a payoff table involving three states of nature and two decision alternatives. The probability that S₁ will occur is 0.1; the probability that S₂ will occur is 0.6.
-Refer to Exhibit 21-2. The expected value of the best alternative equals

• A)29
• B)105
• C)12
• D)38.5

---

Definitions:

Factor X

A placeholder term for an unspecified or unknown factor that can influence outcomes in a given situation or calculation.

Production Function

A production function is an equation that relates the quantity of output produced to the quantities of inputs used in production.

Factors Of Production

The inputs or resources that are used in the process of producing goods and services, typically including labor, capital, land, and entrepreneurship.

Input

The resources, materials, or labor used in the production of goods and services.