What is the EMV for Option 2 in the following decision table? States of Nature
$$\begin{array} { | c | c | c | }
\hline \text { Alternatives } & \mathrm { S } _ { 1 } & \mathrm {~S} _ { 2 } \
\hline \mathrm { p } & .3 & .7 \
\hline \text { Option } 1 & 15,000 & 20,000 \
\hline \text { Option } 2 & 10,000 & 30,000 \
\hline
\end{array}$$
A) 10,000
B) 16,000
C) 20,000
D) 24,000
E) 30,000

Question

What is the EMV for Option 2 in the following decision table? States of Nature
$$\begin{array} { | c | c | c | } 
\hline \text { Alternatives } & \mathrm { S } _ { 1 } & \mathrm {~S} _ { 2 } \
\hline \mathrm { p } & .3 & .7 \
\hline \text { Option } 1 & 15,000 & 20,000 \
\hline \text { Option } 2 & 10,000 & 30,000 \
\hline
\end{array}$$
A) 10,000
B) 16,000
C) 20,000
D) 24,000
E) 30,000

Quizplus · Accepted Answer

The EMV (Expected Monetary Value) for Option 2 is calculated as follows: EMV = (Probability of S1 * Payoff for S1) + (Probability of S2 * Payoff for S2) = (0.3 * 10,000) + (0.7 * 30,000) = 3,000 + 21,000 = 24,000.

What Is the EMV for Option 2 in the Following