Exhibit 21-5 Below You Are Given a Payoff Table Involving Three States

question 14

Multiple Choice

Exhibit 21-5
Below you are given a payoff table involving three states of nature and three decision alternatives. The probability of occurrence of S₁ is 0.2 and the probability of occurrence of S₂ is 0.3.
-Refer to Exhibit 21-5. The expected value of perfect information is

• A)18.2
• B)11.7
• C)51
• D)37

---

Definitions:

Inflation Expectations

The rate at which people expect the prices of goods and services to increase in the future, which can influence economic behavior.

Unemployment Rate

The fraction of people in the labor market who are not employed but are seeking a job.

Short-run Phillips Curve

A graphical representation showing the inverse relationship between unemployment and inflation rates in an economy over the short term, suggesting a trade-off between the two.

Price of Oil

The cost per barrel of crude oil as determined by global markets, influenced by factors such as supply and demand, geopolitical events, and economic indicators.