Perform a threshold analysis, economics, Microeconomics

Assignment Help:
You are a member of a problem solving group that is concerned with incidents involving losses with their information system (IS). Let us assume that IS loss events can be grouped into two types, low severity IS loss (LS) and high severity IS loss (HS). Your group is focused on preventing HS incidents and you are trying to decide whether you should spend the money to install a protection system designed to reduce the likelihood of high severity IS losses; the protection system involves an elaborate system for backing up current systems and the detail specifics are not important for this analysis. The group has never had a HS IS loss but a group member was able to access a national incident database, which indicates, that from a population of 1,000 academic institutions, there were a total of 10 HS IS losses reported over the last 10 years. The database shows that only 2 of the 10 HS losses occurred in academic institutions with a protection system; the remaining 8 had no protection system. After some discussion the group decided that the risk of a HS loss is probably similar to the institutions that reported into the national incident database.

Assume that the annual cost of a protection system is $20,000 in total and the average loss from a high severity IS loss is $2 million per incident. Assume that expected cost is your evaluation performance measure.

Q: Despite the above information that I’ve provided, in order to do a proper cost/benefit analysis, you still need information on the % of academic institutions which have protection. Please perform a threshold analysis on this parameter and for each side of the threshold value indicate your preferred action (i.e. spend the $ on protection or not).

Related Discussions:- Perform a threshold analysis, economics

Xbox games demanded, Think about the demand for the three popular game cons...

Think about the demand for the three popular game consoles: XBox, PS3, and Wii. What is the effect on the demand for XBox games and the quantity of XBox games demanded if, other th

Derive the optimal contract, Assume that in the market there exist two type...

Assume that in the market there exist two types of workers where the principle cannot distinguish types. The two types only differ with respect to the disutility of effort. The dis

calculate price elasticity of demand and supply, 1. Calculate price ...

1. Calculate price elasticity of demand and supply for the following functions when (a) P=8 and (b) Q=6. i. P= 40 - 0.5Q ii. Q= -40 + 0.75P iii

Average fixed costs, how do you find the average fixed costs using total fi...

how do you find the average fixed costs using total fixed costs and total product?

Oligopoly, cartels model of collusive oligopoly

cartels model of collusive oligopoly

Intermediate products, Intermediate Products: Products (which includes both...

Intermediate Products: Products (which includes both services and goods) that aren't produced in order to be consumed, but somewhat are produced in order to be used in the producti

Consumer and producer surplus, analyse the rise and fall in the price under...

analyse the rise and fall in the price under market equillibrium situation?

Input substitution when the input price change, Input Substitution When the...

Input Substitution When the Input Price Change  Isoquants and Isocosts and Production Function The minimum cost combination can be written as: - Minimum cost

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd