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Multiple Choice and True/False Quiz
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1.
Maximin is a criterion used when making decisions under ______________.
A)certainty
B)uncertainty
C)risk
D)None of the above.
2.
When making a decision in an environment of _____________, the likelihood of each state of nature can be estimated.
A)certainty
B)uncertainty
C)risk
D)None of the above.
3.
The __________________ is the difference between the expected payoff that would be realized when we know which state of nature will occur and the expected payoff under risk.
A)maximax criterion
B)maximin criterioin
C)expected utility
D)expected value of perfect information
E)expected value of sample information
4.
A person's utility is determined by the preferences he/she exhibits for decision choices involving __________________
A)certainty.
B)uncertainty.
C)risk.
D)states of nature.
5.
The expected net gain of sampling equals the expected ______________ minus the cost of sampling.
A)payoff of sampling
B)monetary value
C)value of sample information
D)payoff of no sampling
E)value of perfect information
6.
When we assess the worth of sample information in a decision making problem, we are performing a _______________ analysis.
A)prior decision
B)preposterior
C)posterior decision
D)utility
E)payoff
7.
A set of potential future conditions that will have an effect on the results of a decision is called the states of nature.
A)True
B)False
8.
The maximin criterion finds the best possible payoff for each alternative and then chooses the alternative that yields the maximum payoff.
A)True
B)False
9.
A tire manufacturer needs to make a decision about the amount of production for the coming month (high vs. low). The level of production largely depends on the level of demand. For this situation, the level of demand (high, medium, low) is the states of nature.
A)True
B)False
10.
Maximax is a criterion used when making decisions under uncertainty.
A)True
B)False
11.
The maximax criterion finds the best possible payoff for each alternative, and then chooses the alternative that yields the maximum best possible payoff.
A)True
B)False
12.
The expected monetary value criterion is best used when many similar decisions will be made.
A)True
B)False





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