1. An optometrist is considering opening a clinic.  If the optometrist opens a clinic as the single provider, she could get a profit of $200,000 if the market is favorable, but could lose $150,000 if the market is unfavorable.  The optometrist could also for a practice with other doctors and would gain a profit of $120,000 if the market is favorable, but lose only $50,000 if the market is unfavorable.  If theoptometrist decides not to open any kind of practice, there is no cost.  A market research firm offers to conduct a study at a fee of $25,000. They have used the Bayes’ theorem to make the following statements of probability:

P (favorable market | favorable study) = 0.78

                P (favorable market | unfavorable study) = 0.12

                P (favorable study) = 0.65

                P (favorable market) = 0.5

1. Calculate EMVs and draw a decision tree (20 pts)
2. Write out the recommended strategy (2 pts)
3. Calculate EVSI, how much the optometrist is be willing to pay for the study (3 pts)