Earl Shell owns his own Sno-Cone business and lives 30 miles…
Questions
Eаrl Shell оwns his оwn Snо-Cone business аnd lives 30 miles from а beach resort. The sale of Sno-Cones is highly dependent upon his location and upon the weather. At the resort, he will profit $110 per day in fair weather, $20 per day in foul weather. At home, he will profit $70 in fair weather, $50 in foul weather. Assume that on any particular day, the weather service suggests a 60% chance of fair weather. If Earl could find a forecaster who could tell him each day if it would be fair or foul weather how much would he be willing to pay for that perfect information? The payoff table is Profit Fair weather Foul weather Probability = 0.6 Probability = .4 Sell at the resort 110 20 Sell at home 70 50
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