How much money should a firm be willing to spend to obtain a perfect market forecast?

Expected value of perfect information(EVPI).

Explanation:

A perfect market is a market where both buyers and sellers have full market knowledge about certain products and can easily compare prices of these products .

Expected value of perfect information(EVPI) is the price a firm is willing to pay so as to have access to a perfect market information. It is the profit not achieved as a result of situtation of doubt which affect planned outcome.

One of the importance of EVPI is that the value of someone who has knowledge of perfect forecast is known. Also, possibility of decisons wrongly made can be taken out from the perfect forecast as EVPI helps to measure uncertainty.

the answer is a. $209,000

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