A audio manufacturer must decide whether to expand her plant now or wait at least another year.her advisor tells her that if she expands now and economic conditions remain good ,there will be a profit of $ 188000 during the next fiscal year; if he expands now and there is a recession ,there will be aloss (negative profit) of $80000;if he waits another year and economic conditions remain good,there will be a profit of $160000;and if she waits at least another year and there is a recession ,there will be a small loss
of $16000.The audio manufacturer feels that probabilities for economic conditions remaining good or there being a recession are 1/5 and 4/5 respectively.will expanding her plant capacity now maximize her expected profit? explain.
2006-08-02
02:30:55
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9 answers
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asked by
karta s
2