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A hospital group has to replace its old MRI and related equipment. Two Choices are under consideration: one is to invest in technology similar to

A hospital group has to replace its old MRI and related equipment. Two Choices are under consideration: one is to invest in technology similar to what they have used but a newer model, the other is to try a newer technology that promises higher efficiency and significantly clearer results, but may not produced as advertised.

The following table shows the anticipated profits ($000) under the two choices and two states if nature:

The Hospital group estimates the probability of the new MRI works as advertised is 0.30

States of Nature
ChoiceNew Technology works as advertisedNew Technology does not work as advertised
Current Technology125125
new technology20050


Requirment:

The hospital group estimates that the probability of the new MRI equipment works as advertised an 30 The hospital group could hire an expert in MAI technology and get the expert's prediction if the new MAI technology will work as advertised or not The expert services cost $5000. Historically, you have found out that when a new Miki technology has worked as advertised the expert predicted it would happen 9 of the time. On the other hand, when a new MAI technology did not work as advertised, the rupert predicted correctly A of the time. On this worksheet, to the left, develop the tree you need to flip. On the tree, Invert the appropriate probabilities. And flip the tree and find the new probabilities.


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