Geoff has taken his car to a mechanic for repair. The mechan…
Geoff has taken his car to a mechanic for repair. The mechanic diagnosed the problem and has offered Geoff two possible repairs as a solution: Repair A: The repair costs $750. There is an 80% chance that this repair will solve the problem and no additional work will be needed. If the repair doesn’t work, an additional repair will cost $400. Repair B: The repair costs $300. There is a 40% chance that this repair will solve the problem and no additional work will be needed. If the repair doesn’t work, an additional repair will cost $800. Using Expected Value Theory, which repair should Geoff tell the mechanic to make? Be sure to show your work.
Geoff has taken his car to a mechanic for repair. The mechan…
Questions
Geоff hаs tаken his cаr tо a mechanic fоr repair. The mechanic diagnosed the problem and has offered Geoff two possible repairs as a solution: Repair A: The repair costs $750. There is an 80% chance that this repair will solve the problem and no additional work will be needed. If the repair doesn’t work, an additional repair will cost $400. Repair B: The repair costs $300. There is a 40% chance that this repair will solve the problem and no additional work will be needed. If the repair doesn’t work, an additional repair will cost $800. Using Expected Value Theory, which repair should Geoff tell the mechanic to make? Be sure to show your work.
Geоff hаs tаken his cаr tо a mechanic fоr repair. The mechanic diagnosed the problem and has offered Geoff two possible repairs as a solution: Repair A: The repair costs $750. There is an 80% chance that this repair will solve the problem and no additional work will be needed. If the repair doesn’t work, an additional repair will cost $400. Repair B: The repair costs $300. There is a 40% chance that this repair will solve the problem and no additional work will be needed. If the repair doesn’t work, an additional repair will cost $800. Using Expected Value Theory, which repair should Geoff tell the mechanic to make? Be sure to show your work.