.8 if customers are receptive and $200,000 with probability .2 if they are not.

(a) Draw the associated decision tree.

(b) What course of action should AFC follow in launching the new product?

A fair coin is flipped three successive times. You receive $1.00 for each head (ll) that turns up and an additional $.25 for each two successive heads that appear (remember that HHH includes two sets of Hll). However, you give back $1.10 for each tail that shows up. You have the options to either play or not play the game.

(a) Draw the decision tree for the game.

(b) Would you favor playing this game?

You have the chance to play the following game in a gambling casino. A fair die is rolled twice, leading to four outcomes: (1) both rolls show an even match, (2) both rolls show an odd match, (3) the outcomes are either even-odd or odd-even, and (4) all other outcomes.

You are allowed to bet your money on exactly two outcomes with equal dollar amounts. For example, you can bet equal dollars on even-match (outcome 1) and oddmatch

(outcome 2). The payoff for each dollar you bet is $2.00 for the first outcome, $1.95 for the second and the third outcomes, and $1.50 for the fourth outcome.

(a) Draw the decision tree for the game.

(b) Which two choices would you make?

(c) Do you ever come out ahead in this game?