Question 1

SCENARIO 20-2  
-Referring to Scenario 20-2, the coefficient of variation for Action A is

Accepted Answer

A)  12.8% 
B)  33.3% 
C)  133.33% 
D)  333.3% 
A)  12.8% 
B)  33.3% 
C)  133.33% 
D)  333.3% B

Question 2

True or False: Opportunity loss is the difference between the lowest profit for an event and the actual
profit obtained for an action taken.

Accepted Answer

A) True 
 B)False  False

Question 3

The curve represents the expected monetary value approach.

Accepted Answer

A)  risk averter's 
B)  risk taker's 
C)  risk neutral 
D)  Bernoulli 
A)  risk averter's 
B)  risk taker's 
C)  risk neutral 
D)  Bernoulli C

Question 4

SCENARIO 20-2  
-Referring to Scenario 20-2, what is the best action using the maximin criterion?

Accepted Answer

A)  Action A 
B)  Action B 
C)  Either Action A or Action B 
D)  It cannot be determined. 
A)  Action A 
B)  Action B 
C)  Either Action A or Action B 
D)  It cannot be determined.

Question 5

At Eastern University, 60% of the students are from suburban areas, 30% are from rural areas, and
10% are from urban areas.Of the students from the suburban areas, 60% are nonbusiness majors.Of
The students from the rural areas, 70% are nonbusiness majors.Of the students from the urban areas,
90% are nonbusiness majors.The probability that a randomly selected student is a business major is

Accepted Answer

A)  0.66 
B)  0.54 
C)  0.44 
D)  0.34 
A)  0.66 
B)  0.54 
C)  0.44 
D)  0.34

Question 6

SCENARIO 20-6
A student wanted to find out the optimal strategy to study for a Business Statistics exam.He
constructed the following payoff table based on the mean amount of time he needed to study every
week for the course and the degree of difficulty of the exam.From the information that he gathered
from students who had taken the course, he concluded that there was a 40% probability that the exam
would be easy.  
-Referring to Scenario 20-6, what is the opportunity loss of spending 8 hours per week on average
studying for the exam when the exam turns out to be difficult?

Accepted Answer

The answer of SCENARIO 20-6
A student wanted to find out...

Question 7

SCENARIO 20-2  
-Referring to Scenario 20-2, the return to risk ratio for Action B is

Accepted Answer

A)  0.167 
B)  3.0 
C)  6.0 
D)  9.0 
A)  0.167 
B)  3.0 
C)  6.0 
D)  9.0

Question 8

A company that manufactures designer jeans is contemplating whether to increase its advertising
Budget by $1 million for next year.If the expanded advertising campaign is successful, the company
Expects sales to increase by $1.6 million next year.If the advertising campaign fails, the company
Expects sales to increase by only $400,000 next year.If the advertising budget is not increased, the
Company expects sales to increase by $200,000.Identify the actions in this decision-making problem.

Accepted Answer

A)  Two choices: (1) increase the budget and (2) do not increase the budget. 
B)  Two possibilities: (1) campaign is successful and (2) campaign is not successful. 
C)  Four consequences resulting from the Increase/Do Not Increase and Successful/Not Successful combinations. 
D)  The increase in sales dollars next year. 
A)  Two choices: (1) increase the budget and (2) do not increase the budget. 
B)  Two possibilities: (1) campaign is successful and (2) campaign is not successful. 
C)  Four consequences resulting from the Increase/Do Not Increase and Successful/Not Successful combinations. 
D)  The increase in sales dollars next year.

Question 9

SCENARIO 20-5  
-Referring to Scenario 20-5, what is the opportunity loss for Action B with Event 1?

Accepted Answer

The answer of SCENARIO 20-5  
-Referring to Scenario 20-5,...

Question 10

Blossom's Flowers purchases roses for sale for Valentine's Day.The roses are purchased for $10 a
Dozen and are sold for $20 a dozen.Any roses not sold on Valentine's Day can be sold for $5 per
Dozen.The owner will purchase 1 of 3 amounts of roses for Valentine's Day: 100, 200, or 400 dozen
Roses.The opportunity loss for buying 400 dozen roses and selling 200 dozen roses at the full price is

Accepted Answer

A)  - $2,000 
B)  $1,000 
C)  $500 
D)  $0 
A)  - $2,000 
B)  $1,000 
C)  $500 
D)  $0

Question 11

SCENARIO 20-3  
-Referring to Scenario 20-3, which investment has the optimal coefficient of variation?

Accepted Answer

A)  Investment A 
B)  Investment B 
C)  The investments are equal. 
D)  It cannot be determined. 
A)  Investment A 
B)  Investment B 
C)  The investments are equal. 
D)  It cannot be determined.

Question 12

SCENARIO 20-6
A student wanted to find out the optimal strategy to study for a Business Statistics exam.He
constructed the following payoff table based on the mean amount of time he needed to study every
week for the course and the degree of difficulty of the exam.From the information that he gathered
from students who had taken the course, he concluded that there was a 40% probability that the exam
would be easy.  
-Referring to Scenario 20-6, what is the expected value of perfect information?

Accepted Answer

The answer of SCENARIO 20-6
A student wanted to find out...

Question 13

SCENARIO 20-1  
-Referring to Scenario 20-1, if the probability of S1 is 0.5, then the expected opportunity loss (EOL)
For A1 is

Accepted Answer

A)  3 
B)  4.5 
C)  7 
D)  8 
A)  3 
B)  4.5 
C)  7 
D)  8

Question 14

SCENARIO 20-2  
-Referring to Scenario 20-2, what is the optimal action using the EOL criterion?

Accepted Answer

A)  Action A 
B)  Action B 
C)  Either Action A or Action B 
D)  It cannot be determined. 
A)  Action A 
B)  Action B 
C)  Either Action A or Action B 
D)  It cannot be determined.

Question 15

Blossom's Flowers purchases roses for sale for Valentine's Day.The roses are purchased for $10 a
Dozen and are sold for $20 a dozen.Any roses not sold on Valentine's Day can be sold for $5 per
Dozen.The owner will purchase 1 of 3 amounts of roses for Valentine's Day: 100, 200, or 400 dozen
Roses.Given 0.2, 0.4, and 0.4 are the probabilities for the sale of 100, 200, or 400 dozen roses,
Respectively, then the EMV for buying 200 dozen roses is

Accepted Answer

A)  $4,500 
B)  $2,500 
C)  $1,700 
D)  $1,000 
A)  $4,500 
B)  $2,500 
C)  $1,700 
D)  $1,000

Question 16

SCENARIO 20-1  
-Referring to Scenario 20-1, if the probability of S1 is 0.4, then the probability of S2 is

Accepted Answer

A)  0.4 
B)  0.5 
C)  0.6 
D)  1.0 
A)  0.4 
B)  0.5 
C)  0.6 
D)  1.0

Question 17

The risk-_______ curve shows a rapid increase in utility for initial amounts of money followed by a
gradual leveling off for increasing dollar amounts.

Accepted Answer

The answer of The risk-_______ curve shows a rapid increase...

Question 18

SCENARIO 20-1  
-Referring to Scenario 20-1, if the probability of S1 is 0.5, then the expected monetary value (EMV )
For A2 is

Accepted Answer

A)  3 
B)  4 
C)  6.5 
D)  8 
A)  3 
B)  4 
C)  6.5 
D)  8

Question 19

SCENARIO 20-1  
-Referring to Scenario 20-1, if the probability of S1 is 0.5, what is the optimal alternative using EMV?

Accepted Answer

A)  A1 
B)  A2 
C)  A3 
D)  It cannot be determined. 
A)  A1 
B)  A2 
C)  A3 
D)  It cannot be determined.

Question 20

SCENARIO 20-3  
-Referring to Scenario 20-3, which investment has the optimal return to risk ratio?

Accepted Answer

A)  Investment A 
B)  Investment B 
C)  The investments are equal. 
D)  It cannot be determined. 
A)  Investment A 
B)  Investment B 
C)  The investments are equal. 
D)  It cannot be determined.

SCENARIO 20-2 -Referring to Scenario 20-2, the coefficient of variation for Action A is

True or False: Opportunity loss is the difference between the lowest profit for an event and the actual profit obtained for an action taken.

The curve represents the expected monetary value approach.

SCENARIO 20-2 -Referring to Scenario 20-2, what is the best action using the maximin criterion?

SCENARIO 20-2 -Referring to Scenario 20-2, the return to risk ratio for Action B is

SCENARIO 20-5 -Referring to Scenario 20-5, what is the opportunity loss for Action B with Event 1?

SCENARIO 20-3 -Referring to Scenario 20-3, which investment has the optimal coefficient of variation?

SCENARIO 20-1 -Referring to Scenario 20-1, if the probability of S1 is 0.5, then the expected opportunity loss (EOL) For A1 is

SCENARIO 20-2 -Referring to Scenario 20-2, what is the optimal action using the EOL criterion?

SCENARIO 20-1 -Referring to Scenario 20-1, if the probability of S1 is 0.4, then the probability of S2 is

The risk-_______ curve shows a rapid increase in utility for initial amounts of money followed by a gradual leveling off for increasing dollar amounts.

SCENARIO 20-1 -Referring to Scenario 20-1, if the probability of S1 is 0.5, then the expected monetary value (EMV ) For A2 is

SCENARIO 20-1 -Referring to Scenario 20-1, if the probability of S1 is 0.5, what is the optimal alternative using EMV?

SCENARIO 20-3 -Referring to Scenario 20-3, which investment has the optimal return to risk ratio?

Defining and Collecting Data

Organizing and Visualizing

Numerical Descriptive Measures

Basic Probability

Discrete Probability Distributions

Conthe Tinuonormausl Disdis Tributionstribution and Other

Sampling Distributions

Confidence Interval Estimation

Fundamentals of Hypothesis Testing: One-Sample Tests

Two-Sample Tests

Analysis of Variance

Chi-Square and Nonparametric

Simple Linear Regression

Introduction to Multiple

Multiple Regression

Time-Series Forecasting

Business Analytics

A Roadmap for Analyzing Data

Statistical Applications in Quality Management

Filters

Exam 20: Decision Making

SCENARIO 20-2 -Referring to Scenario 20-2, the coefficient of variation for Action A is

True or False: Opportunity loss is the difference between the lowest profit for an event and the actual profit obtained for an action taken.

The curve represents the expected monetary value approach.

SCENARIO 20-2 -Referring to Scenario 20-2, what is the best action using the maximin criterion?

SCENARIO 20-2 -Referring to Scenario 20-2, the return to risk ratio for Action B is

SCENARIO 20-5 -Referring to Scenario 20-5, what is the opportunity loss for Action B with Event 1?

SCENARIO 20-3 -Referring to Scenario 20-3, which investment has the optimal coefficient of variation?

SCENARIO 20-1 -Referring to Scenario 20-1, if the probability of S1 is 0.5, then the expected opportunity loss (EOL) For A1 is

SCENARIO 20-2 -Referring to Scenario 20-2, what is the optimal action using the EOL criterion?

SCENARIO 20-1 -Referring to Scenario 20-1, if the probability of S1 is 0.4, then the probability of S2 is

The risk-_______ curve shows a rapid increase in utility for initial amounts of money followed by a gradual leveling off for increasing dollar amounts.

SCENARIO 20-1 -Referring to Scenario 20-1, if the probability of S1 is 0.5, then the expected monetary value (EMV ) For A2 is

SCENARIO 20-1 -Referring to Scenario 20-1, if the probability of S1 is 0.5, what is the optimal alternative using EMV?

SCENARIO 20-3 -Referring to Scenario 20-3, which investment has the optimal return to risk ratio?

Defining and Collecting Data

Organizing and Visualizing

Numerical Descriptive Measures

Basic Probability

Discrete Probability Distributions

Conthe Tinuonormausl Disdis Tributionstribution and Other

Sampling Distributions

Confidence Interval Estimation

Fundamentals of Hypothesis Testing: One-Sample Tests

Two-Sample Tests

Analysis of Variance

Chi-Square and Nonparametric

Simple Linear Regression

Introduction to Multiple

Multiple Regression

Time-Series Forecasting

Business Analytics

A Roadmap for Analyzing Data

Statistical Applications in Quality Management

Filters