SCENARIO 17-15 The Tree Diagram Below Shows the Results of the Classification

question 194

True/False

SCENARIO 17-15
The tree diagram below shows the results of the classification tree model that has been constructed to
predict the probability of a cable company's customers who will switch ("Yes" or "No") into its
bundled program offering based on the price ($30, $40, $50, $60) and whether the customer spends
more than 5 hours a day watching TV ("Yes" or "No") using the data set of 100 customers collected
from a survey.
-Referring to Scenario 17-15, the highest probability of switching is predicted to
occur among customers who watch more than 5 hours of TV a day and are offered the bundled
price of higher than $40.

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Definitions:

Unimpeded Entry

A situation in a market where there are no obstacles preventing new competitors from entering and competing.

MR = MC Rule

A principle in economics stating that profit maximization occurs when marginal revenue equals marginal cost.

Short Run

A period in economics where at least one input is fixed and cannot be changed.

Long Run

A period of time in economics during which all factors of production and costs are variable, allowing for full adjustment to changes.