The EMV of a Decision with Three States of Nature

question 5

Essay

The EMV of a decision with three states of nature is $33,000. If the profit/value under the states of nature A, B, and C is $10,000, $20,000, and $50,000, respectively, and states B and C have equal probabilities, determine the likelihood of state of nature A.

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Definitions:

Common Hepatic Duct

Part of the biliary duct system formed by the joining of the right and left hepatic ducts.

Bile Canaliculi

Small ducts between the liver cells that collect bile, contributing to its transport towards the bile ducts.

Cystic Duct

Duct leading from the gallbladder; joins the common hepatic duct to form the common bile duct.

Pylorus

The portion of the stomach that connects to the duodenum; it regulates the passage of partially digested food into the small intestine.