R. Est, local operations manager for the Infernal Revenue Service, must decide upon the temporary tax examiner workforce size for the upcoming tax season. Mr. Est estimates that net revenues ( in thousands of dollars ) will vary with how well taxpayers comply with the new tax code just passed by Congress, as follows:
Number Compliance
of --------------------------------------
Examiners Low Medium High
===================================
One 50 50 50
Two 100 60 20
Three 150 70 -10
1. If Mr. Est believes the likelihoods of low, medium and high compliance are 20%, 30% and 50% respectively, what are the expected net revenues for each alternative and what number of assistants should he hire?
a. 50, 48, 46: Hire one examiner.
b. 50, 50, 50: Hire one examiner.
c. 50, 52, 46: Hire two examiners.
d. None of the above.