A Family Business Is Considering Making an Investment in Its

Multiple Choice

A family business is considering making an investment in its manufacturing operation.Three decisions are under consideration: (1) a large investment; (2) a medium investment;and (3) a small investment.The business believes that there are three possible future outcomes for its product: (1) increasing demand; (2) stable demand;and (3) decreasing demand.The following payoff table describes the decision situation.

The best decision for the business using the Hurwicz criterion with a coefficient of optimism equal to 0.80 would be to

A) make the large investment
B) make the medium investment
C) make the small investment
D) choose stable demand