TABLE 19-6 a Student Wanted to Find Out the Optimal Strategy to Strategy

question 87

Short Answer

TABLE 19-6
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 mean amount of time he needed to study every week 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.

-Referring to Table 19-6, what would be the expected profit if the student had perfect information on whether the exam will be easy or difficult?

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Definitions:

Becoming Profitable

The process or stage where a business starts generating a financial gain or profit beyond its operational costs and expenses.

Microfinance

A source of financial services for entrepreneurs and small businesses lacking access to banking and entrepreneurial training.

Financial Services

A broad range of services including banking, investment, insurance, and other fiscal transactions that are managed or offered by financial institutions.

Affordability Trap

A situation where individuals or families are unable to save for the future or improve their socio-economic status due to high living costs relative to their income.