Answer Happy

Problem 1 A local real estate investor in Orlando is considering three alternative investments: a motel, a res- taurant, or a theater. Profits from the motel or restaurant will be affected by the availability of gasoline and the number of tourists; profits from the theater will be relatively stable under any con- ditions. The following payoff table shows the profit or loss that could result from each investment: Investment Motel Restaurant Theater Shortage $-8.000 2,000 6,000 Homework 5 Part 1 e. Minimax regret d. Hurwicz (a = .4) e. Equal likelihood Gasoline Availability Stable Supply $15,000 8,000 6,000 Surplus $20,000 6,000 5,000 Determine the best investment, using the following decision criteria. a. Maximax b. Maximin