A. Fiscal Policy involves changing _______________. In the United States, Fiscal Policy is implemented by the ____________.
1 answer:
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Answer:
a. Maximin = 19.0
b. Minimax = 17.6
c. Hurwicz ( 0.40) = Taiwan
d. Equal likelihood = Taiwan
Explanation:
Remember, we are told to: Note that since the payoff is cost, the maximax criteria becomes minimax and maximin becomes minimax
a) Maximin: Since the payoff is cost, we begin by determining the maximum cost for each alternative and then selecting the one which gives the minimum of these maximums. (minimax)
b) Minimax: Since the payoff is cost, we begin by determining the minimum cost for each alternative and then selecting the one which gives the maximum of these minimums. (maximin).
c) Hurwicz (0.40): In this method, we add and multiply each payoff value by alpha (0.4).
South Korea = 15.2 (0.4) + 21.7 (0.6) = 19.1 ( remember, in $ millions)
China = 17.6 (0.4) + 19.0 (0.6) = 18.44
Taiwan = 14.9 (0.4) + 19.2 (0.6) = 17.48
Poland = 13.8 (0.4) + 22.5 (0.6) = 19.02
Mexico = 12.5 (0.4) + 25.0 (0.6) = 20
From the values above we select the minimum outcome since the company is looking at saving cost. Which is Taiwan; having the lowest cost of $17.48 million.
d) Using the formula where P = payoffs value, n = number of events.
South Korea = 15.2 + 21.7 + 19.1 /3 = 18.66
China = 17.6 + 19.0 + 18.5 /3 = 18.36
Taiwan = 14.9 + 19.2 +17.1 /3 = 17.06
Poland = 13.8 + 22.5 + 16.8 /3 = 17.7
Mexico = 12.5 + 25.0 + 21.2 /3 = 19.56
Taiwan should be selected since it has the lowest cost of $17.06 million.
Answer
The answer and procedures of the exercise are attached in a microsoft excel document.
Explanation
Please consider the data provided by the exercise. If you have any question please write me back. All the exercises are solved in a single sheet with the formulas indications.
