# Qmb Final Exam

A. .32 B. .52 C. .94 D. .92 E. .38

Answer: D

2. Suppose that for a certain football game the probability that the home team will be ahead at half-time is 0.60 and the probability that the home

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Answer: C

12. If she uses the minimax regret criterion, how many beauticians will she decide to hire? A. one B. two C. three D. either one or two E. either two or three

Answer: C

Use the following information and decision tree to respond to the next 5 questions:

A manager has developed a table that shows payoffs ($000) for a future store. The payoffs depend on the size of the store and the strength of the demand: States of Nature Demand Low High

Alternative Small 30 50

Store Size Large 10 80

The manager estimates that the probability of low demand is 0.50 and the probability of high demand is 0.50. The manager could request that a local research firm conduct a survey which would cost $2,000 and would better indicate whether demand will be low or high. In discussions with the research firm, the manager has learned the following about the reliability of surveys conducted by the firm: Actual Demand was Low High

Survey Low .90 .30

Showed High .10 .70

The manager used Bayes theorem to calculate revised probabilities which are shown on the tree diagram below:

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13.