The Miramar Company is going to introduce one of three new products: a wrench, a
ID: 3179349 • Letter: T
Question
The Miramar Company is going to introduce one of three new products: a wrench, a hammer, or a nut remover. The market conditions (favorable, stable, or unfavorable) will determine the profit or loss the company realizes. A market research firm will do a survey to predict future market conditions. The results will indicate either positive or negative market conditions. There is a 0.60 probability of a positive report given favorable market conditions, a 0.30 probability of a positive report given stable market conditions, and a 0.10 probability of a positive report given unfavorable conditions. The survey will cost $2,000. The first node of this decision tree will be a
A. chance node with Favorable, Stable, and Unfavorable as branches
B. decision node with Wrench, Hammer, and Nut remover as branches
C. decision node with buy survey and do not buy survey as branches
D. chance node with favorable and unfavorable market conditions as branches
Explanation / Answer
Option A is the correction answer
Explanation:
First the decision tree will have branches like favourable, stable and unfavourable then each of these branches will have postive and negative branchesand these probabilities are given in the question.
hence Option A is the correct answer