Multiple Choice
Happy Cows is a perfectly competitive dairy farm with a 50 percent chance of a high demand of $5 and a 50 percent chance of a low demand of $4. Free Cows is a perfectly competitive dairy farm with a 50 percent chance of a high demand of $6 and a 50 percent chance of a low demand of $3. Which of the following statements is true?
A) All else equal, an accurate forecast is more valuable to Happy Cows than Free Cows.
B) All else equal, neither Free Cows nor Happy Cows can benefit from an accurate forecast.
C) All else equal, an accurate forecast has the same value to both Free Cows and Happy Cows.
D) All else equal, an accurate forecast is more valuable to Free Cows than Happy Cows.
Correct Answer:
Verified
Correct Answer:
Verified
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