A group of medical professionals is considering the construction of a private clinic. If the medical de- mand 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 suc- cessful. Construct a decision tree to help analyze this problem.
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A group of medical professionals is considering the
construction of a private clinic. If the medical de-
mand 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 suc-
cessful. Construct a decision tree to help analyze this
problem. What should the medical professionals do?
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