Asked by Ranju Guragain on Jul 12, 2024
Verified
To calculate expected profit under certainty,we need to have perfect information about which event will occur.
Perfect Information
A situation in decision-making where all participants have access to all relevant facts and data.
Expected Profit
The forecasted gain or loss from a business activity, considering possible outcomes and their probabilities.
Certainty
The state or quality of being absolutely sure or confident about something, without any doubt.
- Learn the concept and mathematical derivation of the Expected Value of Perfect Information (EVPI) and its critical role in decision-making.
Verified Answer
CJ
Coleman JonesJul 14, 2024
Final Answer :
True
Explanation :
To calculate expected profit under certainty, we need to have perfect information about which event will occur. This means there is no uncertainty or risk involved in the calculation, and we know exactly what the outcome will be.
Learning Objectives
- Learn the concept and mathematical derivation of the Expected Value of Perfect Information (EVPI) and its critical role in decision-making.
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