Answer to Question #171752 in Economics for subh

Question

A medicine manufacturing company is trying to choose between two pharmaceutical companies that are competing in the market. First Company has offered the manufacturing company Rs 10,000 plus Rs 2 per medicine sold. Second Company has offered the manufacturer Rs 2,000 plus Rs 4 per medicine sold. The manufacturer believes that five levels of demand are as follows: 1,000, 2,000, 5,000, 10,000 and 50,000. Compute the payoffs for each level of demand for first company and second company. Construct a payoff Table, indicating the events and alternative courses of action. Construct a decision tree. Construct an opportunity loss Table

Answer 1

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