Question: The following payoff table provides profits based on various possible decision alternatives and various levels of demand at Amber Gardner’s software firm:

Demand

Low High

Alternative 1 $10,000 $30,000

Alternative 2 $5,000 $40,000

Alternative 3 -$2,000 $50,000

The probability of low demand is 0.4, whereas the probability of high demand is 0.6

a) What is the highest possible expected monetary value?

b) What is the expected value under certainty?

c) Calculate the expected value of perfect information for this situation.