Paradoxes and Anomalies of Economic Life - Case Study Example

The given paper demonstrates that so far the example fabric has met PPF’s essential performance standards but additional testing will illustrate if it can attain their maximum specification. The decision hypothesis is a logical and systematic strategy for the analysis of decision making. A fine decision is one that is oriented on logic; reflects on all accessible data and potential alternatives, and the quantitative strategies of data. In terms of the expected values calculated, and consequent decision, it does not matter if costs are to the left of the amount or vice versa; though rationally the costs are incurred prior to the site acquisition revenue is earned so it generates more sense to put expenses to the left of amount.

Clearly, nothing will be achieved if PPF management decides not to go on with the project what he needs to find to decide to drill is an EV for this act that is greater than $0. The EV for drilling is $140k so he should drill. When p (abandoned) = 0 this means the likelihood of it failing to acquire the site and make a profit is 1 (i.e. certain) and from the pertinent section of the decision illustration it can be observed that the EV is 1 x -$- £14.8.M In the case of p (maximum) = 1 then there are two potential it can be possible to buy Curie site or delay decision making and maintain the Faraday site.

These double events are equally exclusive and comprehensive so must add up to 1. To attain this one must normalize the probabilities of buying the Curie site and expanding the Faraday site to make them add up to 1.