Economics Assignment
17-2 Game Show Uncertainty
In the final round of a TV game show, contestants have a chance to increase their current winnings of $1million to $2million. If they are wrong, their prize is decreased to $500,000. A contestant thinks his guess will be right 50% of the time. Should he play? What is the lowest probability of a correct guess that would make playing profitable?
17-6 Hiring
The HR department is trying to fill a vacant position for a job with a small talent pool. Valid applications arrive every week or so, and the applicants all seem to bring different levels of expertise. For each applicant, the HR manager gathers information by trying to verify various claims on resumes, but some doubt about fit always lingers when a decision to hire or not is to be made. What are the Type I and II decision error costs? Which decision error is more likely to be discovered by the CEO? How does this affect the HR manager's hiring decisions?
Group Problem
G17-1 Uncertainty
Describe a decision your company has made when facing uncertainty. Compute the expected costs and benefits of the decision. Offer advice on how to proceed. Compute the profit consequences of the advice.
For this assignment, you are required to complete Individual Problems 17-2 and 17-6 at the end of Chapter 17 in Managerial Economics: A Problem Solving Approach. In addition, you are required to complete Group Problem G17-1: Uncertainty. As you are evaluating your current company, address the following decisions in your response (500-750 words):
1. What environmental factors and risks must be considered in the company's decision-making process?
2. Evaluate costs factors influencing the company's decision.
3. Determine strategies that would provide value to the outcome your company is seeking relating to this decision.
Prepare this assignment according to the guidelines found in the APA Style Guide, located in the Student Success Center. An abstract is not required.