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A Firm Is Considering the Decision of Investing in New

question 39

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A firm is considering the decision of investing in new plants.The following is the profit payoff matrix under three conditions: it does not expand,it builds two new plants,or it builds one new plant.Three possible states of nature can exist--no change in the economy,the economy contracts and the economy grows.The firm has no idea of the probability of each state. A firm is considering the decision of investing in new plants.The following is the profit payoff matrix under three conditions: it does not expand,it builds two new plants,or it builds one new plant.Three possible states of nature can exist--no change in the economy,the economy contracts and the economy grows.The firm has no idea of the probability of each state.   What decision would be made using the maximum expected value rule? A) no new plants B) one new plant C) two new plants D) not enough information to tell What decision would be made using the maximum expected value rule?


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