The Dollar Department Store Chain Has the Opportunity of Acquiring

question 34

Essay

The Dollar Department Store chain has the opportunity of acquiring either 3,5,or 10 leases from the bankrupt Granite Variety Store chain.Dollar estimates the profit potential of the leases depends on the state of the economy over the next five years.There are four possible states of the economy as modeled by Dollar Department Stores and its president estimates P(s₁)= .4,P(s₂)= .3,P(s₃)= .1,and P(s₄)= .2.The utility has also been estimated.Given the payoffs (in $1,000,000's)and utility values below,which decision should Dollar make?
$$\begin{array}{l}\text { Utility Table }\\\begin{array} { l l l l l l l l } \text { Payoff } ( \text { in } \$ 1,000,000 ' s ) & + 10 & + 5 & + 2 & 0 & - 1 & - 10 & - 20 \\\hline \text { Utility } & + 10 & + 5 & + 2 & 0 & - 1 & - 20 & - 50\end{array}\end{array}$$

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Definitions:

Intelligence Quotient

A measure of a person's relative cognitive abilities as compared to the general population, often represented by a numerical score.

Inappropriate Suppression

The unhealthy or maladaptive practice of forcibly inhibiting or restraining one's authentic thoughts or feelings.

Healthier Alternative

An option considered to be better for physical or mental well-being compared to another, potentially harmful one.

Emotional Balance

The ability to manage emotions effectively, maintaining equilibrium between positive and negative feelings.