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I was trying to do June 2010 Q2 b(i) I really had a hard time, i know about the different methods that is maximax, maximin,minimax but my problem is whic to put on th x-axis and y-axis.
Please help my thought process thank You
Minimax etc is nothing to do with this question: it’s purely expected values.
There is no x or y axis. It is simply a table setting out every combination of profits depending on student fees (3 possible) and capacity utilisation (3 possible). This gives 9 possible combinations. The probability of, say, fees decreasing by 10% is 0.6; the probability of capacity reducing to, say, 70% is 0.3. Therefore the probability of the 10% fee decrease and the capacity cut to 70% happening together is 0.6 x 0.3 = 0.18.
The probability of each of the 9 combinations is calculated and multiplied by the profit of that combination. The results are added up to give the expected profit.
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