Could someone please explain how the table in the solution was constructed?
Particularly in the first row, why $0$ and why $54$ millions?
Why was $6$ and $600$ millions not included ?
Solution
Thank you in advance
2026-03-25 03:01:43.1774407703
Game theory - How was the table of decision analysis formulation constructed?
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The $6$ was included. If the company sells $10,000$ with a variable profit of $600$ each they make $6$ million, but the fixed cost is $6$ million, so the profit is $0$. If they sell $100,000$, the variable profit is $60$ million. Deducting the $6$ million fixed cost leaves $54$ million.