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BUS 461 Week 4 Quiz

BUS 461 Week 4 Quiz

  1. Question : The “principle of insufficient reason” indicates the decision maker’s belief that any state of nature is as likely to occur as any other state.

Student Answer: True
False

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Points Received: 1 of 1
Comments:

Question 2. Question : The indifference approach for assigning utility values asks the decision maker which of two alternatives is preferred: the payoff under consideration or a chance at the highest payoff with a risk of the lowest payoff.

Student Answer: True
False

Points Received: 0 of 1
Comments:

Question 3. Question : The fact that so many people enter sweepstakes and/or buy lottery tickets demonstrates the difference between:

Student Answer: the expected value and the expected utility criteria.

altruism and selfishness.

risk aversion and risk indifference.

certainty and uncertainty.

Points Received: 1 of 1
Comments:

Question 4. Question : If it is assumed that each possible state of nature has an equal likelihood of occurrence, the expected value criterion will yield the same result as:

Student Answer: maximin.

minimax

maximax

the principle of insufficient reason.

Points Received: 1 of 1
Comments:

Question 5. Question : The expected value of perfect information (EVPI):

Student Answer: is the same as the expected return with perfect information (ERPI).

is never less than the expected value of sample information (EVSI).

does not require probabilities in its calculation.

requires the availability of sample information.

Points Received: 1 of 1
Comments:

Question 6. Question : An aggressive decision maker would prefer the minimax regret criterion over the maximin criterion.

Student Answer: True
False

Points Received: 1 of 1
Comments:

Question 7. Question : The states of nature in a payoff table should be mutually exclusive and collectively exhaustive.

Student Answer: True
False

Points Received: 1 of 1
Comments:

Question 8. Question : Utilities are generally well approximated by monetary payoffs for:

Student Answer: risk-averse individuals.

risk-preferring individuals.

small businesses.

large corporations.

Points Received: 0 of 1
Comments:

Question 9. Question : Consider the payoff table in chapter 6 problem 7 (page 376). The optimal decision under the maximin criterion is:

Student Answer: D1

D2

D3

D4

Points Received: 1 of 1
Comments:

Question 10. Question : The payoff table always has more states of nature than decision alternatives.

Student Answer: True
False

Points Received: 1 of 1
Comments:

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