Question:
The owner of Tastee Cookies needs to decide whether to lease a small, medium, or large new retail outlet. She estimates that monthly profits will vary with demand for her cookies as follows:
If she feels there is a 30 percent chance that demand will be high, what is her expected payoff under certainty?
a. $1,100
b. $1,000
c. $500
d. $900
e. $1,600
