Normal Distribution Probability Calculation

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Questions and Answers

What is the formula for Expected Value of Perfect Information (EVwPI)?

  • EVwPI = Probability of State of Nature / Maximum Payoff under Perfect Information
  • EVwPI = EVPwPI − EPV
  • EVwPI = (0.5 * P200,000) + (0.5 * P0)
  • EVwPI = (Probability of State of Nature × Maximum Payoff under Perfect Information) / Expected Payoff Value (correct)

In the context of the provided text, what does Maximax refer to?

  • Compromise between an optimistic and a pessimistic decision
  • Least possible loss
  • Optimistic decision – highest possible gain (correct)
  • Expected Opportunity Loss

What is the Expected Value of Perfect Information (EVPI) in the scenario discussed?

  • P60,000 (correct)
  • P65,000
  • P100,000
  • P40,000

Under the Maximin approach, what decision is typically made?

<p>Least possible loss (D)</p> Signup and view all the answers

What is the Hurwicz Criterion known for?

<p>Compromise between optimism and pessimism (B)</p> Signup and view all the answers

How is Expected Opportunity Loss (EOL) calculated in the given scenario?

<p>(0.5 x 100,000) + (0.5 x 20,000) (C)</p> Signup and view all the answers

Which decision-making strategy is based on maximizing the potential gains?

<p>Maximax (C)</p> Signup and view all the answers

What is the primary objective of Expected Value of Perfect Information (EVPI)?

<p>Maximize potential gains (B)</p> Signup and view all the answers

Based on the text, which approach helps in making a 'balanced' decision between an optimistic and a pessimistic one?

<p>'Hurwicz Criterion' (D)</p> Signup and view all the answers

'Criterion of realism' according to Hurwicz involves what kind of decision-making?

<p>'Compromise between optimistic and pessimistic' (B)</p> Signup and view all the answers

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