Instruction 17-1
a Student Wanted to Find Out the Optimal

question 47

Short Answer

Instruction 17-1
A student wanted to find out the optimal strategy to study for a Business Statistics exam. He constructed the following payoff table based on the mean amount of time he needed to put in every week studying for the course and the degree of difficulty of the exam. From the information that he gathered from students who had taken the course, he concluded that there was a 40% probability that the exam would be easy.
$$\begin{array} { | l | l | l | l | } \hline & 16 \text { hours } & 8 \text { hours } & 4 \text { hours } \\\hline \text { Easy Exam } & 40 & 60 & 80 \\\hline \text { Difficult Exam } & 100 & 50 & 0 \\\hline\end{array}$$
-Referring to Instruction 17-1,what is the opportunity loss of spending 4 hours per week on average studying for the exam when the exam turns out to be easy?

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Definitions:

Nonexecutive Employees

Workers who do not hold executive or managerial positions within a company, often involved in the daily operational activities.

Lenders

Entities that provide financial resources to individuals or organizations with the expectation that the funds will be repaid, typically with interest.

Ethics

A branch of philosophy that involves systematizing, defending, and recommending concepts of right and wrong behavior.

Maximizing Wealth

The process or strategy aimed at increasing the financial value and assets owned by an individual or corporation.