Dan Hein Owns the Mineral and Drilling Rights to a 1,000

Multiple Choice

Dan Hein owns the mineral and drilling rights to a 1,000 hectare tract of land.If he drills a well and does not strike oil his net loss will be $500,000, but if he drills a well and strikes oil his net gain will be $1,000,000.If he does not drill, his loss is the cost of the mineral and drilling rights, which amount to $10,000.For Dan's decision problem, the variable "oil in the tract" is one of the ___.

A) payoffs
B) decision alternatives
C) states of nature
D) revised probabilities
E) prior probabilities