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A small garden shop must decide the number of Christmas trees to stock for the upcoming holiday season. From past years, they know that the
A small garden shop must decide the number of Christmas trees to stock for the upcoming holiday season. From past years, they know that the number of trees demanded will be either 25 or 45 with probabilities of .5 each. If they order 25 trees, they will make a profit of $750, regardless of the number of trees demanded. If they order 45 trees, and only 25 are demanded, they will have leftover trees, and their profit will be only $350. On the other hand, if they order 45 trees and 45 are demanded, their profit will be $1350. If they order 45 trees, the expected value of profit will be: If the garden shop's owner is risk neutral, the shop should order _____ trees (45 or 250 An economist can predict with accuracy the number of trees that will be demanded before the garden shop places its order for Christmas trees. If the garden shop orders the number of trees predicted by theeconomist, the shop's expected profit with this complete information is: The value of complete information is $
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