The Expected Value with Perfect Information Is

question 35

Multiple Choice

The expected value with perfect information is:

• A) the maximum EMV for a set of alternatives.
• B) the same as the expected value of perfect information.
• C) the difference between the payoff under perfect information and the payoff under risk.
• D) the expected return obtained when the decision maker knows which state of nature is going to occur before the decision is made.
• E) obtained using conditional probabilities.

---

Definitions:

Marginal Product

The increase in output that results from employing one more unit of a particular input, holding all other inputs constant.

Explicit Costs

Direct, out-of-pocket expenses paid by firms for inputs to production, such as wages, rent, and materials, as opposed to implicit costs which are not directly paid out in cash.

Implicit Costs

The opportunity costs that are not directly paid for or incurred during the production of a good or service.

Average Total Cost

The complete expenditure of manufacturing (incorporating steady and fluctuating expenses) divided by the aggregate volume of goods produced.