Question 1 A company is considering to produce either of product A or B. The profits generated from these two products differ under different state of the economy which can be expressed as recession, normal or boom. The probability that the economy will be in recession is 20%, being normal is 50% and boom is 30%. The profits the products generate under the different state of the economy is depicted as follows: Required a) For each product, calculate the expected profit levels and risk. b) Using the calculations above in part a, state with justification which product should be produced assuming the manager of the company is 1. risk averse ii. risk seeker ii. risk neutral c) Assume the manager of the company can't assign probabilities to the different state of the economy. Under this case, which product should be produced and sold if the manager follows t. The maximin decision criteria ii. The maximax decision criteria iif. The minimax regret decision criteria Question 1 A company is considering to produce either of product A or B. The profits generated from these two products differ under different state of the economy which can be expressed as recession, normal or boom. The probability that the economy will be in recession is 20%, being normal is 50% and boom is 30%. The profits the products generate under the different state of the economy is depicted as follows: Required a) For each product, calculate the expected profit levels and risk. b) Using the calculations above in part a, state with justification which product should be produced assuming the manager of the company is 1. risk averse ii. risk seeker ii. risk neutral c) Assume the manager of the company can't assign probabilities to the different state of the economy. Under this case, which product should be produced and sold if the manager follows t. The maximin decision criteria ii. The maximax decision criteria iif. The minimax regret decision criteria