Unformatted text preview: a decision in an environment of ________________, the likelihood of each
state of nature can be estimated.
A. Certainty
B. Uncertainty
C. Risk
D. Alternatives AACSB: Reflective Thinking
Bloom's: Knowledge
Difficulty: Medium
Learning Objective: 1
Topic: Decision Theory 21. The _______________________ is the difference between the expected payoff that would
have been realized had the best alternative action been selected if we know which state of
nature has occurred and the expected payoff under risk.
A. Maximax criterion
B. Maximin criterion
C. Expected utility
D. Expected value of perfect information
E. Expected value of sample information AACSB: Reflective Thinking
Bloom's: Knowledge
Difficulty: Hard
Learning Objective: 2
Topic: Posterior Analysis 22. The _______________________ is the difference between the expected payoff of
sampling and the expected payoff based on expected monetary criterion and prior
probabilities.
A. Maximax criterion
B. Maximin criterion
C. Expected utility
D. Expected value of perfect information
E. Expected value of sample information AACSB: Reflective Thinking
Bloom's: Knowledge
Difficulty: Hard
Learning Objective: 2
Topic: Posterior Analysis 11914 Chapter 01  An Introduction to Business Statistics 23. The expected value criterion is used for decisionmaking under __________________.
A. Certainty
B. Uncertainty
C. Risk
D. Alternatives AACSB: Reflective Thinking
Bloom's: Knowledge
Difficulty: Medium
Learning Objective: 1
Topic: Decision Theory 24. Maximax is a criterion used when making decisions under __________________.
A. Certainty
B. Uncertainty
C. Risk
D. Alternatives AACSB: Reflective Thinking
Bloom's: Knowledge
Difficulty: Medium
Learning Objective: 1
Topic: Decision Theory 25. A person's utility is determined by the preferences he/she exhibits for decision choices
involving __________.
A. Certainty
B. Uncertainty
C. Risk
D. Bayes' Theorem AACSB: Reflective Thinking
Bloom's: Knowledge
Difficulty: Medium
Learning Objective: 3
Topic: Utility Theory 11915 Chapter 01  An Introduction to Business Statistics 26. The _____________________ criterion is attractive to those decisionmakers who exhibit
a neutral approach towards decision choices involving risk.
A. Expected utility
B. Expected value
C. Maximin
D. Maximax
E. Decision theory AACSB: Reflective Thinking
Bloom's: Knowledge
Difficulty: Hard
Learning Objective: 2
Topic: Posterior Analysis 27. When we assess the worth of sample information in a decision making problem, we are
performing a:
A. Prior analysis
B. Preposterior analysis
C. Posterior analysis
D. Payoff analysis
E. Utility analysis AACSB: Reflective Thinking
Bloom's: Knowledge
Difficulty: Medium
Learning Objective: 2
Topic: Posterior Analysis 28. The expected net gain of sampling equals the expected ______________ minus the cost of
sampling.
A. payoff of sampling
B. payoff of no sampling
C. value of Sample Information
D. value of Perfect Information
E. utility AACSB: Reflective Thinking
Bloom's: Knowledge
Difficulty: Medium
Learning Objective: 2
Topic: Posterior Analysis 11916 Chapter 01  An Introduction to Business Statistics 29. The alternatives 1 and 2 in the following payoff table represent the two possible
manufacturing strategies that the EKA manufacturing company can adopt. The level of
demand affects the success of both strategies. The states of nature (Si) represent the levels of
demand for the company products. S1, S2 and S3 characterize high, medium, and low demand
respectively. The payoff values are in thousands of dollars. The best alternative (course of action) for the EKA manufacturing company using the
maximin criterion is strategy __ and the best possible payoff is _____.
A. 1, $50,000
B. 2, $120,000
C. 1, $100,000
D. 2, $70,000
E. 2, $80,000 AACSB: Analytic Skills
Bloom's: Analysis
Difficulty: Medium
Learning Objective: 1
Topic: Decision Theory 11917 Chapter 01  An Introduction to Business Statistics 30. The alternatives 1 and 2 in the following payoff table represent the two possible
manufacturing strategies that the EKA manufacturing company can adopt. The level of
demand affects the success of both strategies. The states of nature (S1) represent the levels of
demand for the company products. S1, S2 and S3 characterize high, medium, and low demand
with probabilities of .3, .6 and .1 respectively. The payoff values are in thousands of dollars. Find the expected monetary value for each of the alternatives and determine the best
alternative (course of action) for the EKA manufacturing company using the expected
monetary value criterion.
A. EMV1 = $98,000, EMV2 = $95,000, choose strategy 1
B. EMV1 = $88,000, EMV2 = $95,000, choose strategy 2
C. EMV1 = $88,000, EMV2 = $85,000, choose strategy 1
D. EMV1 = $66,667, EMV2 = $76,667 choose strategy 2
E. EMV1 = $120,000, EMV2 = $110,000, choose strategy 1 AACSB: Analytic Skills
Bloom's: Application
Difficulty: Medium
Learning Objective: 1
Topic: Decision Theory 11918 Chapter 01  An Introduction to Business Statistics 31. The alternatives 1 and 2 in the following pa...
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 Winter '14
 Frequency, Frequency distribution, Histogram, AACSB, Statistical charts and diagrams

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