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Assume again that you are the manager of an electrodomestic store. The store can have weak demand, with a probability of 0.3, and strong demand,

Assume again that you are the manager of an electrodomestic store. The store can have weak demand, with a probability of 0.3, and strong demand, with a probability of 0.7. Moreover, the store's profit will depend on your effort, as shown in the following table. From your perspective, each effort level comes with a cost. This cost is 2 for low effort, 10 for medium, and 32 for high. Both you and the owner are risk-neutral. Weak Demand Strong Demand Low Effort 50 70 Medium Effort 70 110 High Effort 100 140

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