The new owner of a beauty shop is trying to decide whether t

The new owner of a beauty shop is trying to decide whether to hire one, two, or three beauticians. She estimates that profits next year (in thousands of dollars) will vary with demand for her services and has estimated demand in three categories low, medium and high

1. If she feels the chances of low, medium, and high demand are 50%, 20%, and 30% respectively, what are the expected annual profits for the number of beauticians she will decide to hire?

A. $54,000 B. $55,000 C. $70,000 D. $80,000 E. $135,000

2. If she feels the chances of low, medium, and high demand are 50%, 20%, and 30% respectively, what is her expected value of perfect information?

A. $54,000 B. $55,000 C. $70,000 D. $80,000 E. $135,000.

What the difference between these two questions?And which is the correct answer?Thank you!

Solution

There is insufficient information to answer.

I suspect that this is a follow-up question to a question that provides revenue information.