Apply the Expected Value Approach to Decision Making

question 23

Multiple Choice

Apply the expected value approach to decision making.
-A farm owner in upstate New York who grows summer vegetables (e.g. tomatoes)
Must decide whether to employ additional pickers this season. If he does, he could hire
Either migrant workers or local teenagers who need summer employment. The migrant
Workers are more experienced, faster, but more expensive. Although the teenagers will
Work for less, they lack experience and tend to damage plants and produce. His profits
Depend on the growing season as shown below. Suppose the farmer's almanac predicts
The probability of a good growing season this year to be .75. Based on the expected value
Approach, the farmer should

• A) hire migrant workers if the growing season is good.
• B) hire teenagers.
• C) do not do any extra hiring.
• D) hire migrant workers.
• E) do not do any extra hiring if the growing season is bad.

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Definitions:

Dissenters

Individuals who express opinions that are in variance with those previously, commonly, or officially expressed.

Correct Majority

The larger part of a group that holds the accurate or right viewpoint or decision, especially in the context of consensus or voting.

Collectivist Societies

Societies that prioritize the group over the individual, emphasizing interdependence, cooperation, and social harmony.

Conformist

An individual who follows the rules, norms, and standards of a group in order to fit in, often at the expense of personal identity.