Question 1

Expected monetary value (EMV) is:

Accepted Answer

A)  the average or expected value of the decision if you knew what would happen ahead of time 
B)  the weighted average of possible monetary values, weighted by their probabilities 
C)  the average or expected value of the information if it was completely accurate 
D)  the amount that you would lose by not picking the best alternative 
E)  a decision criterion that places an equal amount on all states of nature 
A)  the average or expected value of the decision if you knew what would happen ahead of time 
B)  the weighted average of possible monetary values, weighted by their probabilities 
C)  the average or expected value of the information if it was completely accurate 
D)  the amount that you would lose by not picking the best alternative 
E)  a decision criterion that places an equal amount on all states of nature

Question 2

Tornado charts and spider charts can be used to determine which input variables have the most impact on the expected value in a decision problem.

Accepted Answer

A) True 
 B)False

Question 3

What should Ms. Rich do? What is her expected cost in that case?

Accepted Answer

The tree above shows that the

Question 4

____ can be used to determine which input variables have the most impact on the expected value in a decision problem.

Accepted Answer

A)  Payoff tables 
B)  Risk profiles 
C)  Spider charts 
D)  Decision nodes 
E)  None of these choices 
A)  Payoff tables 
B)  Risk profiles 
C)  Spider charts 
D)  Decision nodes 
E)  None of these choices

Question 5

The decision maker now has $15,000 and two possible decisions. For decision 1, she loses $1,000 for certain. For decision 2, she loses $0 with probability 0.9 and loses $4,000 with probability 0.10. Which decision maximizes the expected utility of her net wealth?

Accepted Answer

@#IMG-DLM& The tree above, which again c

Question 6

Is this decision maker risk averse? Explain why or why not.

Accepted Answer

Yes, this decision maker is risk averse.

Question 7

Suppose that a decision maker's risk attitude toward monetary gains or losses x given by the utility function U(x) =  
-Show that this decision maker is indifferent between gaining nothing and entering a risky situation with a gain of $80,000 (probability 1/3) and a loss of $10,000 (probability 2/3).

Accepted Answer

@#IMG-DLM& The tree above shows the utility values

Expected monetary value (EMV) is:

Tornado charts and spider charts can be used to determine which input variables have the most impact on the expected value in a decision problem.

What should Ms. Rich do? What is her expected cost in that case?

____ can be used to determine which input variables have the most impact on the expected value in a decision problem.

The decision maker now has $15,000 and two possible decisions. For decision 1, she loses $1,000 for certain. For decision 2, she loses $0 with probability 0.9 and loses $4,000 with probability 0.10. Which decision maximizes the expected utility of her net wealth?

Is this decision maker risk averse? Explain why or why not.

Suppose that a decision maker's risk attitude toward monetary gains or losses x given by the utility function U(x) = -Show that this decision maker is indifferent between gaining nothing and entering a risky situation with a gain of $80,000 (probability 1/3) and a loss of $10,000 (probability 2/3).

Introduction to Business Analytics

Describing the Distribution of a Single Variable

Finding Relationships Among Variables

Probability and Probability Distributions

Normal, Binomial, Poisson, and Exponential Distributions

Sampling and Sampling Distributions

Confidence Interval Estimation

Hypothesis Testing

Regression Analysis: Estimating Relationships

Regression Analysis: Statistical Inference

Time Series Analysis and Forecasting

Introduction to Optimization Modeling

Optimization Models

Introduction to Simulation Modeling

Simulation Models

Data Mining

Importing Data Into Excel

Analysis of Variance and Experimental Design

Statistical Process Control

Filters

Exam 6: Decision Making Under Uncertainty

Expected monetary value (EMV) is:

Tornado charts and spider charts can be used to determine which input variables have the most impact on the expected value in a decision problem.

What should Ms. Rich do? What is her expected cost in that case?

____ can be used to determine which input variables have the most impact on the expected value in a decision problem.

The decision maker now has $15,000 and two possible decisions. For decision 1, she loses $1,000 for certain. For decision 2, she loses $0 with probability 0.9 and loses $4,000 with probability 0.10. Which decision maximizes the expected utility of her net wealth?

Is this decision maker risk averse? Explain why or why not.

Suppose that a decision maker's risk attitude toward monetary gains or losses x given by the utility function U(x) = -Show that this decision maker is indifferent between gaining nothing and entering a risky situation with a gain of $80,000 (probability 1/3) and a loss of $10,000 (probability 2/3).

Introduction to Business Analytics

Describing the Distribution of a Single Variable

Finding Relationships Among Variables

Probability and Probability Distributions

Normal, Binomial, Poisson, and Exponential Distributions

Sampling and Sampling Distributions

Confidence Interval Estimation

Hypothesis Testing

Regression Analysis: Estimating Relationships

Regression Analysis: Statistical Inference

Time Series Analysis and Forecasting

Introduction to Optimization Modeling

Optimization Models

Introduction to Simulation Modeling

Simulation Models

Data Mining

Importing Data Into Excel

Analysis of Variance and Experimental Design

Statistical Process Control

Filters