The Construction Manager for Acme Construction, Inc If He Feels the Chances of Declining, Stable, and Growing

question 42

Multiple Choice

The construction manager for Acme Construction, Inc., must decide whether to build single-family homes, apartments, or condominiums. He estimates annual profits (in $000) will vary with the population trend as follows: $$\begin{array} { | l | l | l | l | } \hline { \text { Type } } & { \text { POPULATION TREND } } \\\hline & \text { Declining } & \text { Stable } & \text { Growing } \\ \hline \text { Single Family } & 200 & 90 & 70 \\\hline \text { Apartments } & 70 & 170 & 90 \\\hline \text { Condos } & - 20 & 100 & 220 \\\hline\end{array}$$ If he feels the chances of declining, stable, and growing population trends are 40 percent, 50 percent, and 10 percent, respectively, what is his expected value of perfect information?

• A) $187,000
• B) $132,000
• C) $123,000
• D) $65,000
• E) $55,000

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Definitions:

Health Maintenance Organizations

Managed care organizations that provide health insurance coverage to their members through a network of doctors, hospitals, and other healthcare providers.

Reduce Health Care Costs

Initiatives or policies aimed at lowering the expenses associated with medical care.

Elective Surgical Procedure

A type of surgery that is planned in advance, not arising from an emergency situation, and is subject to the patient's choice.

Equilibrium Price

The price at which the quantity of a good demanded equals the quantity supplied, leading to a stable market condition.