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A group of Physicians must build an addition to their existing private clinic. They are considering three different sized additions; a small, a medium and
A group of Physicians must build an addition to their existing private clinic. They are considering three different sized additions; a small, a medium and a large addition. If the medical demand is high, they would realize a net profit of $ with a large addition, a net profit of $ with a medium addition and a net profit of $ with a small addition. Ifhe medical demand is low they would realize a net loss of $ with the large addition, a net loss of $ with the medium addition and a net profit of $ with the small addition. The Physicians were also able to assign utility preference values to each of the potential payoffs they could encounter. Utility of $ is U $ is U $ is U $ is U $ is and U $ is The physicians also have a reliable forecast indicating a probability of the high medical demand. Using expected utility, what alternative should they choose and what is the expected utility of that decision?amedium, blarge, csmall, dsmall,
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