Instruction 17-3
the Following Payoff Table Shows Profits Associated with a Set

question 23

Multiple Choice

Instruction 17-3
The following payoff table shows profits associated with a set of three alternatives under two possible events.
$$\begin{array} { c c c c } \text { States } & A 1 & A 2 & A B \\\hline 1 & 12 & - 2 & 8 \\2 & 4 & 10 & 5\end{array}$$ where:
S1 is event 1
A1 is action alternative 1
S2 is event 2
A2 is action alternative 2
A3 is action alternative 3
-Referring to Instruction 17-3,if the probability of S1 is 0.5,what is the optimal alternative using expected monetary value (EMV) ?

• A) A1
• B) A2
• C) A3
• D) It cannot be determined.

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Definitions:

Confidence Intervals

Ranges within which a population parameter is estimated to lie with a certain level of confidence, often used to indicate the reliability of an estimate.

Regression Coefficients

Parameters in a regression model that quantify the relationship between the dependent variable and each of the independent variables.

Sampling Error

The discrepancy between the statistical characteristics of a sample and those of the entire population, arising purely from the randomness of the sample selection.

Dummy Variables

Variables used in regression analysis to represent categorical data by assigning numerical values, typically 0 or 1, to represent the presence or absence of certain characteristics.