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A group of medical professionals is considering the construction of a private clinic If the medical demand is high ie there is a favorable market for the clinic the physicians could realize

A group of medical professionals is considering the construction of a private clinic. If the medical demand is high (i.e., there is a favorable market for the clinic), the physicians could realize a net profit of $100,000. If the market is not favorable, they could lose $40,000. Of course, they don’t have to proceed at all, in which case there is no cost. In the absence of any market data, the best the physicians can guess is that there is a 50–50 chance the clinic will be successful.

Question 9 of 9

20.0 Points
Construct a decision tree by fill-in the blanks below in reference to the following chart.

The decision choice at Decision 1 is and that at Decision 2 is Event 1 is and Event 2 is .

The probability for Prob1 is and that for Prob2 is .

Payoff 1 is and Payoff 2 is .

EMV 1 is and EMV 2 is .

 

Apr 04 2020 Read more Less More

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