A Plant Manager Wants to Know How Much He Should

question 38

Multiple Choice

A plant manager wants to know how much he should be willing to pay for perfect market research.Currently there are two states of nature facing his decision to expand or do nothing.Under favorable market conditions the manager would make $100,000 for the large plant and $5,000 for the small plant.Under unfavorable market conditions the large plant would lose $50,000 and the small plant would make $0.If the two states of nature are equally likely,how much should he pay for perfect information?

• A)$0
• B)$25,000
• C)$50,000
• D)$100,000
• E)$145,000

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Definitions:

Passive Organisms

Organisms or entities that do not actively influence their environment or conditions, often used in research contexts to describe the behavior of subjects under observation.

Independent Variable

A variable in experimental research that is manipulated or changed by the researcher to observe its effect on the dependent variable.

Positive Light

A favorable or advantageous representation or perspective of something or someone.

Investigator Expectancies

Preconceived notions or expectations by researchers that could potentially influence the outcome of a study.