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ADMS 3330 (2)
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Chapter 4

3330_CH4_MCQ.pdf

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Department
Administrative Studies
Course Code
ADMS 3330
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all

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CHAPTER 4 MULTIPLE CHOICE 1. The options from which a decision maker chooses a course of action are a. called the decision alternatives. b. under the control of the decision maker. c. not the same as the states of nature. d. All of the alternatives are true. ANSWER: d 2. States of nature a. can describe uncontrollable natural events such as floods or freezing temperatures. b. can be selected by the decision maker. c. cannot be enumerated by the decision maker. d. All of the alternatives are true. ANSWER: a 3. A payoff a. is always measured in profit. b. is always measured in cost. c. exists for each pair of decision alternative and state of nature. d. exists for each state of nature. ANSWER: c 4. Making a good decision a. requires probabilities for all states of nature. b. requires a clear understanding of decision alternatives, states of nature, and payoffs. c. implies that a desirable outcome will occur. d. All of the alternatives are true. ANSWER: b 5. A decision tree a. presents all decision alternatives first and follows them with all states of nature. b. presents all states of nature first and follows them with all decision alternatives. c. alternates the decision alternatives and states of nature. d. arranges decision alternatives and states of nature in their natural chronological order. ANSWER: d 6. Which of the methods for decision making without probabilities best protects the decision maker from undesirable results? a. the optimistic approach b. the conservative approach c. minimum regret d. minimax regret ANSWER: b 7. Sensitivity analysis considers a. how sensitive the decision maker is to risk. b. changes in the number of states of nature. c. changes in the values of the pa
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