Consider the Following to Answer the Question(s) Below

question 4

Essay

Consider the following to answer the question(s) below:
A landowner is considering a community development project. Even though he realizes that the current market for housing is not very favourable, he believes that there will be an influx of retirees into the area within the next five years. He is trying to decide between two alternatives: (1) building detached homes in a planned retirement community or (2) building a smaller townhouse/condominium complex. Mortgage interest rates will affect his outcomes and the applicable payoff (in $ millions) table is shown below.
-Using the maximin approach, which action should the land owner choose?

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Definitions:

Consumption

The use of goods and services by households or individuals, typically as it contributes to economic measures like GDP.

Service

An intangible act or use for which a consumer, firm, or government is willing to pay.

Good

An item or service that satisfies a want or need and is available for sale or exchange in the market.

Maximizing Utility

The economic principle that individuals or firms seek to achieve the highest level of satisfaction or benefit from their choices.