Now suppose RMG is considering paying for marketing study to aid them make better decision regarding the location of their next retail outlet mall. If marketing study costs $5000, and for simplicity they've ruled out suburban site, answer following questions.

a. If the probability of a favorable study is 0.75 and an unfavorable study is 0.25, and the results of the study help RMG alter their probabilities of a good or bad economy as follows, draw a decision tree to reflect the options available to RMG, including whether to conduct the marketing study, and use the EMV approach to recommend a strategy.

P(good economy/favorable study) = 0.6

P(bad economy/favorable study) = 0.4

P(good economy/unfavorable study) = 0.35

P(bad economy/unfavorable study) = 0.65

b. What should RMG be willing to pay for the marketing study?

c. Calculate the efficiency of sample information and explain what it means.