Construct a Decision Tree to Help Mrs

question 68

Essay

Construct a decision tree to help Mrs.Rich decide whether or not to purchase insurance.Note that the tree should minimize Mrs.Rich's annual expected total cost,including the possible insurance premium,deductible payment,and damage payment.In your tree,make sure to label all decision and chance nodes and include appropriate costs,payoffs and probabilities.

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Definitions:

Minimum Wage

The lowest legal wage that can be paid to workers, set by government law or regulation.

Equilibrium Market Wage

The wage rate at which the quantity of labor supplied equals the quantity of labor demanded in a given market.

Bricklayers

Skilled tradespeople who lay bricks to construct brickwork for buildings and other structures.

Marginal Product

The additional output resulting from the use of one more unit of a productive resource.