COMMERCE 2QA3 Lecture 23: 23___
17 Dec 2015
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Answer: the land owner would choose to build townhouses/condominiums. Answer: the land owner would choose to build the active retirement community. Ev(retirement community) = (0. 35)(-5) + (0. 50)(6) +(0. 15)(10) = . 75 million. Ev(townhouses/condos) = (0. 35)(-2. 5) + (0. 50)(4. 5) + (0. 15)(7. 5) = . 5 million. The landowner would choose to build a retirement community. Answer: . 625 million - . 75 million = $ 0. 875 million or ,000. 1: compute the standard deviation for each action. = . 81 million: compute the coefficient of variation for each action. No; the cv is lower for building townhouses/condominiums so it is a less risky choice. Answer: the farm owner would choose to do no additional hiring. Answer: the farm owner would choose to hire migrant workers. 2: suppose the farmer"s almanac predicts the probability of a good growing season this year to be. Ev(no hiring) = (0. 75)(,000) + (0. 25)(,000) = ,250. The farm owner would choose to hire migrant workers. : 2: compute the standard deviation for each action.
