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Q. The Lubricant is an expensive oil newsletter to which many oil giants subscribe, including Ken Brown. In the last issue, the letter explained explain how the demand for oil products would be extremely high. Apparently, the American consumer will continue to use oil products even if the price of these products doubles. Indeed, one of the articles in the Lubricant states which the chances of a favourable market for oil products was 70%, while the chance of an unfavourable market was only 30%. Ken would like to use these probabilities in determining the best decision.
a) Illustrate what decision model should be used
b) Illustrate what is the optimal decision
c) Ken believes which the $300000 figure for the sub 100 with a favourable market is too high. Explain how much lower would t have to be for Ken to change his decision made in part (b)?
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