Question

(b) If management believes there is a probability of 0.5 that the new product is better, find the expected profits under each strategy and determine the best action Select the correct answer below and fill in the answer boxes to complete your choice (Type integers or decimals) O A The expected profits are $ if they market the product and if they do not. They should market the product because they will lose less if they do. ara OB The expected profits are $ if they market the product and if they do not. They should not market the product because they will earn more if they do not OC. The expected profits are $ if they market the product and they do not. They should market the product because they will eam more if they do so. OD. The expected profits are $ if they market the product and they do not. They should not market the product because they will lose loss if they do not.
choose a b c or d and fill in $

part a

Answer 1

Better Not Better 70,000 -24,000 - Rowl Not sell -60000 - 20,000/- Row2 Deee probability of selling p 9 to trochur is better b 4 they market sell the product, payoff 0.5 (70000) + 0.5(-24000) = 0.5x46000 = /23000 - Row I (Box 1) If they done sell. Upoyolta = 0.5(-60000) + 0.5C-20000) = 0.5% (-80000) - 40000) - Rowa (Box2) They should market the product the cause they will lose less. Hence, (A) ③ There're no dominated strategies. & saddle pt. let prob of being better =P 70000 p + 6 (-p) (-24000) = pl-60000)+(1-P)(-20000 = 13000op = (1-P) x 4000 = 4000 134 000 67 70,000(3) 5 (-24000) = -21194.29 - No saddle pt. (B)