A local daily newspaper has recently been acquired by a large media conglom- erate. The paper currently sells for $1.50/week and has a circulation of 80, 000 subscribers. Advertising sells for $250/page, and the paper currently sells 350 pages/week (50 pages/day). The new management is looking for ways to increase profits. It is estimated that an increase of ten cents/week in the subscription price will cause a drop in circulation of 3, 000 subscribers. Increasing the price of ad- vertising by $100/page will cause the paper to lose approximately 50 pages of advertising per week. The loss of advertising will also affect circulation, since one of the reasons people buy the paper is for the advertisements. It is estimated that a loss of 50 pages of advertisements per week will reduce circulation by 1, 000 subscriptions. Management has decided not to increase the price of advertising beyond $400/page and not to increase the price of the paper beyond $2.20/week.

Aeuropean aircraft producer has spent 15 years in developing a new aircraft that would potential threaten long-lasting boeing's dominance (monopoly) in the same class of aircrafts. the new european aircraft gets high marks on all performance measures except noise. because of the noise, the european producers management is concerned that the us government may impose restrictions which would forbid their aircraft to land in some of the american airports. without restrictions the estimated (present discounted) profit would be 125 million usd. with the restrictions the profit would only be 25 million usd. the chances of both outcomes are estimated to be 50-50. management must decide now whether to the cost of redesign program problem and a 60% chance it will fail. should the european aircraft producer start the noise redesign program if they do not have any redesign parts of the aircraft to solve the noise problem. is 25 million usd. there is a 40% chance that redesign will solve the noise additional information than mentioned above? draw the decision tree, indicate probabilities and outcomes of the events * imagine that the company could find out in advance the outcome of the u. s. government's e find the expected value of perfect information about the u. s. government's decision. decision. draw a new decision tree, indicate probabilities and outcomes of the events.