Heading: Analyzing Risky Decisions

question 43

Multiple Choice

Heading: Analyzing Risky Decisions
**Reference: Use the decision tree along with the given probabilities to answer the next six questions
Probability Event A = 30% Probability Event B = 70%
Probability Event 1 = 58% Probability Event 2 = 42%
Probability of Event A given that Event 1 occurs = 16%
Probability of Event B given that Event 1 occurs = 84%
Probability of Event A given that Event 2 occurs = 50%
Probability of Event B given that Event 2 occurs = 50%

-*If the decision maker chooses Decision A and Event 2 occurs, which decision alternative should the decision maker choose at node E?

• A)Decision 1
• B)Decision 2
• C)Either Decision; they both have the same expected value.
• D)Neither Decision; more information is needed.

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Definitions:

Linear Equations

Equations of the first degree, meaning they can be represented as a straight line on a graph with variables that have no exponent or are to the power of one.

Mixed Nuts

A term generally referring to a combination or assortment of different types of nuts mixed together.

Peanuts

A type of legume or nut, often consumed as a snack, used in cuisines worldwide, and known for its protein content.

Cashews

A type of nut that is crescent-shaped and commonly consumed as a snack or used in various recipes.