Decision Making Based on Expected Value A citrus grower anticipates a profit of
$
100
,
000
this year if the nightly temperatures remain mild. Unfortunately, the weather forecast indicates a
25
%
chance that the temperatures will drop below freezing during the next week. Such freezing weather will destroy
40
%
of the crop and reduce the profit to
$
60
,
000
. However, the grower can protect the citrus fruit against the possible freezing (using smudge pots, electric fans, and so on) at a cost of
$
5000
. Should the grower spend the
$
5000
and thereby reduce the profit to
$
95
,
000
? [Hint: Compute
E
(
X
)
where
X
is the grower will get if he does nothing to protect the fruit.]