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Intro Stats / AP Statistics
A group of medical professionals is considering the construction
of a private clinic. If the medical demand is high (i.e., there is
a favorable market for the clinic), the physicians could realize a
net profit of $100,000. If the market is not favorable, they could
lose $40,000. Of course, they don't have to proceed at all, in
which case there is no cost. In the absence of any market data, the
physicians' best guess is that there is a 50-50 chance the clinic
will be successful.
Construct a small decision tree and, do the calculations, and
highlight the final decision of the medical professionals.