Question 1

Revision of an event's probability depends on:

Accepted Answer

A) purely subjective assessments. 
B) prior probabilities and the accuracy of new information. 
C) the sum of the prior probability and the conditional probability. 
D) the expected value of information. 
E) a consensus among experts' opinions. 
A) purely subjective assessments. 
B) prior probabilities and the accuracy of new information. 
C) the sum of the prior probability and the conditional probability. 
D) the expected value of information. 
E) a consensus among experts' opinions.

Question 2

Using Bayes Theorem Pr(ab)can be expressed as:

Accepted Answer

Question 3

Assuming a uniform distribution of purchase offers between $100,000 and $200,000,the expected maximum offer from 9 potential buyers is _____.

Accepted Answer

A) $150,000 
B) $160,000 
C) $188,888 
D) $180,000 
E) $190,000 
A) $150,000 
B) $160,000 
C) $188,888 
D) $180,000 
E) $190,000

Question 4

Briefly describe the potential pitfalls associated with making intuitive predictions.

Accepted Answer

Intuitive predictions are made informall

Question 5

Joint probability refers to:

Accepted Answer

A) the decision maker's prior probability. 
B) the accuracy of new test information. 
C) a long-run frequency. 
D) the product of a prior probability and a conditional probability. 
E) the chance that at least one of the two events will occur. 
A) the decision maker's prior probability. 
B) the accuracy of new test information. 
C) a long-run frequency. 
D) the product of a prior probability and a conditional probability. 
E) the chance that at least one of the two events will occur.

Question 6

A firm is contemplating the channel of distribution for a newly launched product.Since there is strong demand for the product,its expected profit of $500,000 are unaffected by the channel of distribution.If the firm opts to sell via a distributor,the probability of success is 2/5 and the cost incurred will be $10,000.If the firm opts for direct marketing,the probability of success is 3/5 and the cost incurred will be $20,000.Which method should the firm pursue first?

Accepted Answer

The probability of success is 2/5 for th

Question 7

The expected value of test information is:

Accepted Answer

A) zero if the new information does not change the firm's decisions. 
B) the difference between the actual outcome with test information and without it. 
C) the sum of the expected value with the information and without it. 
D) the expected value of the decision taken using the test. 
E) the same as the expected value of the decision taken without the test. 
A) zero if the new information does not change the firm's decisions. 
B) the difference between the actual outcome with test information and without it. 
C) the sum of the expected value with the information and without it. 
D) the expected value of the decision taken using the test. 
E) the same as the expected value of the decision taken without the test.

Question 8

In a medical study of 5,000 middle-aged men,it was found that (i)10% suffered heart disease, (ii)20% got little or no exercise,and (iii)Of those suffering from heart disease,60% had a history of little or no exercise.Based on this information,determine the risk of heart disease for a middle-aged man who does not exercise.

Accepted Answer

According to Bayes theorem,the probabili

Question 9

In a large metropolitan area,one out of ten drivers on the road on Saturday after midnight is intoxicated.Half of all accidents during this time period involve drunk drivers.Finally,the overall accident rate on Saturday after midnight is 3 accidents per 100 cars on the road.For a drunk driver,the risk of accident is _____.

Accepted Answer

A) 1/10 
B) 1/2 
C) 3/100 
D) 3/20 
E) 1/100 
A) 1/10 
B) 1/2 
C) 3/100 
D) 3/20 
E) 1/100

Question 10

With respect to a decision-maker's optimal strategy,what is the difference between situations of perfect and imperfect information?

Accepted Answer

Under perfect information,the manager is

Question 11

The following table shows the probabilities of A,B,X,and Y.Compute the joint probability table.Then calculate Pr(BY)and Pr(XB).

Accepted Answer

After dividing each entry by t

Question 12

In the late 1990s,many local affiliates of the three TV networks (ABC,CBS,and NBC)left their current partner to join a rival network that was seeking new stations (The networks pay their affiliates to carry programs,which is a major source of revenue for the stations).Why would the affiliates leave their current partner for a new network?

Accepted Answer

The affiliates (probably)have the goal o

Revision of an event's probability depends on:

Using Bayes Theorem Pr(ab)can be expressed as:

Assuming a uniform distribution of purchase offers between $100,000 and $200,000,the expected maximum offer from 9 potential buyers is _____.

Briefly describe the potential pitfalls associated with making intuitive predictions.

Joint probability refers to:

The expected value of test information is:

With respect to a decision-maker's optimal strategy,what is the difference between situations of perfect and imperfect information?

The following table shows the probabilities of A,B,X,and Y.Compute the joint probability table.Then calculate Pr(BY)and Pr(XB).

Introduction to Economic Decision Making

Optimal Decisions Using Marginal Analysis

Demand Analysis and Optimal Pricing

Estimating and Forecasting Demand

Production

Cost Analysis

Perfect Competition

Monopoly

Oligopoly

Game Theory and Competitive Strategy

Regulation, Public Goods, and Benefit-Cost Analysis

Decision Making Under Uncertainty

Asymmetric Information and Organizational Design

Bargaining and Negotiation

Auctions and Competitive Bidding

Linear Programming

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Exam 13: The Value of Information

Revision of an event's probability depends on:

Using Bayes Theorem Pr(ab)can be expressed as:

Assuming a uniform distribution of purchase offers between $100,000 and $200,000,the expected maximum offer from 9 potential buyers is _____.

Briefly describe the potential pitfalls associated with making intuitive predictions.

Joint probability refers to:

The expected value of test information is:

With respect to a decision-maker's optimal strategy,what is the difference between situations of perfect and imperfect information?

The following table shows the probabilities of A,B,X,and Y.Compute the joint probability table.Then calculate Pr(BY)and Pr(XB).

Introduction to Economic Decision Making

Optimal Decisions Using Marginal Analysis

Demand Analysis and Optimal Pricing

Estimating and Forecasting Demand

Production

Cost Analysis

Perfect Competition

Monopoly

Oligopoly

Game Theory and Competitive Strategy

Regulation, Public Goods, and Benefit-Cost Analysis

Decision Making Under Uncertainty

Asymmetric Information and Organizational Design

Bargaining and Negotiation

Auctions and Competitive Bidding

Linear Programming

Filters