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Chapter A, Problem 9P

a)

Summary Introduction

To determine:  The expected value and choice that offers greatest gain.

Introduction:

Expected monetary value (EMV) is expected value or payout that has different possible state of nature, each with their associated possibilities.

b)

Summary Introduction

To determine: Whether FZ will be willing to pay for level of demand in future.

Introduction: The maximum value willing to pay in order to gain for information. In EVPI we determine the amount which is willing to pay for the perfect information is said to be EVPI.

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