A farmer is considering planting five possible crop mixes. The outcomes depend on the weather (dry, average, or rainy).
Assume the three possible weather states have probabilities: dry = 30%, average = 40%, rainy = 30%. Answer the
following two questions.
Avera
Dry
ge
Rainy
Mix A -1
0
9
Mix B
5
-1
3
Mix C
Mix D
-15
4
D
2 2
3
Mix E
3
0
-1
C. Which planting decision has the highest expected
monetary value?
A. mix A
B. mix B
H. What is the expected value of perfect information?
C. mix C
D. mix D
E. mix E