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decision tree analysis, Managerial Economics

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I. A farmer – businessman is in a quandary as to what crop to plant in his land. He has the option to plant Crop A, Crop B, or Crop C. f the weather turns out to be good and the plants Crop A, he expects to realize P 300,000; if he plants Crop B, he expects P 260,000; and if he plants Crop C, P 160,000. If the weather turns out to be normal, and he plants Crop A, he stands to realize P 180,000; if he plants Crop B, P 200,000; and if Crop C, P 100,000. On the other hand, if the weather turns out to be bad, and he plants Crop A, he stands to lose P 40,000; if Crop B, P 20,000; and if Crop C, P 10,000. The farmer inquired from the PAGASA who informed him that the probability of a good weather is 20%; normal weather, 60%; and bad weather 20%.

Base on above information which crop should the farmer-businessman plant? Do a Decision Tree analysis showing the different expected value of the various options.

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