You are the forecaster responsible for hurricane warnings on the southeast corner of the United States in September. Anyone that has lived in North Carolina for a while knows what is it is like at that time of the year, for example. The cost of issuing a warning like a hurricane involves people taking shelter, business stopping, the areas's economy paused - a moderate cost of C dollars. You also know the preventable loss should a hurricane come and the area be unprepared: property damage, lives lost -an extremely high loss of L dollars. Your weather forecast indicates hurricane with a probability of p. (a) Should you issue a warning? Use expectations to create a decision rule for whether issuing or not a warning. Explain your rule.
(b) For what kind of extreme weather warnings is the decision more likely to be "do not warn" than "warn"? Explain.

A)

C ≤ LP   issue warning

C > LP do not issue warning

B )

For ' do not warm ' the condition will be that C is moderate while L is extremely high

Step-by-step explanation:

Assuming Y is an indicator that represents if a warning is issued or not

probability of occurrence of Hurricane = p

where;  C = cost of issuing a warning

             L = cost incurred for not issuing warning

A) Determine if you should issue a warning or not

In this scenario there are about four possible cases

hence the expected cost ( E ) = L ( 1 - Y )p  + Cy

when warning is issued = Y ( 1 )

expected cost ( E ) = C

assuming warning is not issued then Y = 0

hence expected cost ( E ) = LP

Hence the decision rule will be :

C ≤ LP   issue warning

C > LP do not issue warning

B) For ' do not warm ' the condition will be that C is moderate while L is extremely high ( as seen in the question ) because this will make  C/L to be very small. from the condition C > LP  and this simply means that the probability of the Hurricane occurring is very small

this might get deleted, sorry. it has to be an actual question. if you really wanted to give someone free points, ask a question like "why does the sky look blue, and the sun is yellow to our eyes? "

step-by-step explanation:

1k

step-by-step explanation:

-6k+7k

(-6+7)k

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