Exhibit 20-2 Below You Are Given a Payoff Table Involving Three States

question 40

Multiple Choice

Exhibit 20-2
Below you are given a payoff table involving three states of nature and two decision alternatives. The probability that S₁ will occur is 0.1; the probability that S₂ will occur is 0.6; and the probability that S₃ will occur is 0.3.
-Refer to Exhibit 20-2. The expected value of perfect information equals

• A)12
• B)4
• C)37
• D)29

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Definitions:

Hierarchy of Effects

A sequence of stages a consumer goes through, from awareness to knowledge, liking, preference, conviction, and finally purchase of a product or service.

Last Stage

The final phase in a process, such as in product development or the life cycle of a product in the market.

Interest

A charge for borrowing money, typically a percentage of the borrowed amount, or intense curiosity or concern in something.

Awareness

The degree of consumer recognition of a product, brand, or issue, often as a result of marketing efforts.