The New Owner of a Beauty Shop Is Trying to Decide

question 77

Multiple Choice

The new owner of a beauty shop is trying to decide whether to hire one, two, or three beauticians. She estimates that profits next year (in thousands of dollars) will vary with demand for her services, and she has estimated demand in three categories, low, medium, and high.

If she feels the chances of low, medium, and high demand are 50 percent, 20 percent, and 30 percent respectively, what is her expected value of perfect information?

• A)$54,000
• B)$65,000
• C)$70,000
• D)$80,000
• E)$135,000

---

Definitions:

Neuron

A specialized cell transmitting nerve impulses; a nerve cell.

Peripheral Vision

The part of vision that occurs outside the very center of gaze, allowing humans to perceive objects and movement outside the direct line of sight.

Major Highways

Principal arterial routes in a road network, designed for high-speed vehicular traffic and connecting major cities, regions, or countries.

Car Accident

An unintended collision involving one or more vehicles, often resulting in vehicle damage and potential personal injury.