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:

Observational

Pertaining to the method of gathering data by watching behavior or events as they occur in their natural setting without interference.

Personality Traits

Enduring characteristics or behaviors that make up an individual's distinctive patterns of feeling, thinking, and behaving.

Strong Situation

Situations that have clear behavioral expectations, cues, or scripts that lead individuals to behave in a uniform manner.

Weak Situation

Situations that lack clear expected behaviors, rules, or strong cues on how to act, allowing for more variability in responses.