LECTURE 3 QUIZ 1) When an outcome is uncertain, managers need to A

LECTURE 3

QUIZ

1) When an outcome is uncertain, managers need to

A. Describe the risks involved

B. Evaluate the risks involved

C. Manage the risks involved

D. All of the above

2. Subjective probabilities

A. Are often inaccurate

B. Are seldom used for management decisions

C. Are usually identical to objective probabilities

D. All of the above

3. A consultant predicts that there is a 25% chance of earning $50k and a 75% of earning

$100k — expected profit is

A. $87,500

B. $90,000

C. $92,250

D. $93,000

4. A decision maker should use subjective probability rather than objective probability

A. If solid data describing the frequencies of various outcomes were available

B. If available data are unlikely to describe the circumstances

C. If one of the outcomes is very desirable

D. If she were very enthusiastic about the project