Question

A new bar in Clemson has decided it wants to get into the craft beer business. The owners must decide whether to brew their own or purchase the beer from a supplier. The profit depends on the demand. If they brew their own but demand is low, they stand to lose $25,000 compared to making $15,000 if they buy from the supplier. If demand is medium, they stand to profit $45,000 if they brew their own compared to profiting $50,000 if bought from a supplier. High demand yields a profit of $100,000 compared to $75,000. The owners have assigned the following probabilities to the future demand: Low (0.25), Medium (0.45) and High (0.30).

Answer 1

The subject of this question is Business. The bar owners are deciding whether to brew their own craft beer or purchase it from a supplier based on potential profits and probabilities of demand levels.

Step-by-step explanation:

The subject of this question is Business. The owners of the bar in Clemson are trying to decide whether to brew their own craft beer or purchase it from a supplier, based on the different profits they can make depending on the demand. They have assigned probabilities to the different levels of demand: Low (0.25), Medium (0.45), and High (0.30). The question is asking about the decision-making process of the bar owners, considering the potential profits and probabilities.