***************************************************************************** * CHAPTER 19 - STATISTICS FOR BUSINESS & ECONOMICS, 4th Ed., by Paul Newbold* ***************************************************************************** * * Example 19.1, page 785 to Example 19.2, page 788 * * Read these sections and examples carefully. Be sure you understand the * methodology. * *----------------------------------------------------------------------------- * Example 19.3, page 793 * * The GEN1 command is used to generate the Expected Monetary Value, EMV. * GEN1 EMV=0.6*2500+0.2*500+0.2*-1000 PRINT EMV * DELETE / ALL * *----------------------------------------------------------------------------- * Example 19.4, page 794 * * The Expected Monetary Value from marketing the drug is: * GEN1 EMVDRUG=0.5*170000+0.5*80000 PRINT EMVDRUG * * The Expected Monetary Value of retaining the patent is: * GEN1 EMVRET=0.6*125000+0.4*(-10000) PRINT EMVRET * DELETE / ALL * *----------------------------------------------------------------------------- * Example 19.5, page 801 * * The GEN1 command is used to generate the constants. * GEN1 S1=0.6 GEN1 S2=0.4 GEN1 PS1=0.6 GEN1 PS2=0.3 GEN1 NS1=0.4 GEN1 NS2=0.7 * * The GEN1 command is used to calculate the posterior probability for the * state S1 given that the preliminary test is positive. * GEN1 S1P=(PS1*S1)/((PS1*S1)+(PS2*S2)) * * The posterior probabilities for S1 and S2 sum to 1. Thus, the posterior * probability for the state S2 can be easily calculated with the GEN1 * command. * GEN1 S2P=1-S1P PRINT S1P S2P * * The GEN1 command is used to calculate the Expected Monetary Value, EMVSOLD, * if the patent is sold given that the initial test result is positive: * GEN1 EMVSOLD1=S1P*50000+S2P*50000 * * Next the GEN1 command is used to calculate the Expected Monetary Value, * EMVRET1, if the patent is retained given that the initial test result is * positive. * GEN1 EMVRET1=S1P*125000+S2P*(-10000) PRINT EMVSOLD1 EMVRET1 * * The GEN1 command is used to calculate the posterior probability for the * state S1 given that the preliminary test is negative. * GEN1 S1N=(NS1*S1)/((NS1*S1)+(NS2*S2)) * * The posterior probabilities of S1 and S2 sum to 1. Thus, the posterior * probability for the state S2 can be easily calculated with the GEN1 * command. * GEN1 S2N=1-S1N PRINT S1N S2N * * The GEN1 command is used to calculate the Expected Monetary Value, EMVSOLD2, * if the patent is sold given that the initial test result is negative. * GEN1 EMVSOLD2=S1N*50000+S2N*50000 * * Next, the GEN1 command is used to calculated the Expected Monetary Value, * EMVRET2, if the patent is retained given that the initial test result is * negative. * * Note: The value for EMVRET2 will be slightly different than that printed * in the textbook since SHAZAM used 7 significant digits in the * calculation and the textbook used 4 significant digits. * GEN1 EMVRET2=S1N*125000+S2P*(-10000) PRINT EMVSOLD2 EMVRET2 * DELETE / ALL * *----------------------------------------------------------------------------- * STOP