Use This Information to Answer the Following Questions

question 10

Multiple Choice

Use this information to answer the following questions.
Consider the following payoff table that represents the profits earned for each alternative (A,B,and C) under the states of nature S1,S2,and S3.

-Refer to the payoff table.Using the maximax criterion,what would be the highest expected payoff?

• A)$145
• B)$124
• C)$120
• D)$110
• E)$100

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Definitions:

Imports

Goods and services purchased from other countries and brought into a country.

Inflation

The speed at which the overall price level for goods and services increases, thereby diminishing buying power.

Floating Exchange Rates

A system in which currency values are allowed to fluctuate according to foreign exchange market mechanisms without direct intervention by the country’s government.

Interest Rates

The cost of borrowing money, typically expressed as a percentage of the amount loaned, which lenders charge borrowers.