MGT103 Exam |Questions with 100%
Correct Answers
A _ refers to a condition in which the decision maker knows with reasonable certainty what
the alternatives are and what conditions are associated with each alternative.
A. state of uncertainty
B. decision-making condition ý state of risk
C. state of certainty -✔ ✔ C
Light On! Power Company (LO!PO) is nearing capacity at its current St. Doraldo plant. For the
past three months, the general manager has been considering the acquisition and conversion
of a nearby production facility to increase LO!PO's output. He is only partially aware of the risks
and consequences associated with this option and has not yet evaluated all of his options. The
general manager is making a decision under conditions of ___.
A. uncertainty
B. programmed decision-making
C. risk
D. certainty -✔ ✔ A
The site manager for a company is negotiating for a new site to build an office complex. After
several counter-offers, the seller gave the company a final offer. The manager has the option to
accept or reject the offer. If the manager accepts the offer, he gets a site in time to meet the
relocation schedule, but at a price above budget. If he rejects the contract, he may get a more
favorable price if the seller is bluffing, but he may lose out on the location and not be able to
find another one in time if it is not. The manager is making a decision in a state of ___.
A. uncertainty
B. ambiguity
C. risk
D. certainty -✔ ✔ C
,The decision-making process begins by ___.
A. choosing the best alternative
B. defining the decision situation
C. putting the chosen alternative into action
D. identifying alternatives -✔ ✔ B
Janice is the owner of a beauty salon. Her shop operates in a leased property on Main Street.
The owner of the building plans to convert the property into a dog grooming shop. Now Janice
has to select a new location for her beauty salon. She is using a rational decision making
model to evaluate the alternatives before her. Each of her four options is feasible and satisfies
her decision criteria. Which of the following options should Janice choose?
A. Option B, which has high financial costs and low nonfinancial costs
B. Option C, which has low financial costs and low nonfinancial costs
C. Option D, which has high financial costs and high nonfinancial costs
D. Option A, which has low financial costs and high nonfinancial costs -✔ ✔ B
Which of the following is true of decision makers in the classical decision model?
A. They can effectively eliminate certainty to achieve a decision condition of uncertainty.
B. They evaluate all aspects of the decision situation intuitively.
C. They have no information about the possible alternatives.
D. They have complete information about the decision situation. -✔ ✔ D
Blair works at a convenience store. One of the three slushy machines in the store has
clogged four times this week. Blair is weighing the advantages and disadvantages of each of
her three choices: repair the machine again, replace it, or simply remove it and be left with
only two machines. Blair is currently ___.
A. evaluating alternatives
B. recognizing and defining the decision situation
C. implementing an alternative
, D. identifying alternatives -✔ ✔ A
Which of the following is a recommendation made by the proponents of evidence-
based management?
A. Discourage experimentation.
B. Avoid basing decisions on what has been done in the past.
C. Discourage learning by doing.
D. Avoid telling unpleasant truths. -✔ ✔ B
What is escalation of commitment?
A. the tendency to search for alternatives only until one is found that meets some
minimum standard of sufficiency
B. the tendency of decision makers to become so committed to the courses of action
suggested by those decisions that they stay with them, even when the decisions appear to
have been wrong
C. a concept suggesting that decision makers are limited by their values and
unconscious reflexes, skills, and habits
D. an informal alliance of individuals or groups formed to achieve a common goal -✔ ✔ B
WholePath Cereals introduced a new line of whole grain cereal for children. For the second
quarter in a row, sales are well below forecast. Formal surveys have shown that customers do
not like the taste of the cereal, and even those who bought it once are not repeat customers.
WholePath invested a lot of money in developing the new recipe, as well as in marketing to roll
out the new product line. They cannot afford to lose that investment, so they have increased
their advertising budget to try to increase enthusiasm about the product and generate
additional sales. Which of the following concepts is illustrated in the scenario?
A. escalation of commitment
B. satisficing
C. classical decision making
D. rational decision making -✔ ✔ A
Correct Answers
A _ refers to a condition in which the decision maker knows with reasonable certainty what
the alternatives are and what conditions are associated with each alternative.
A. state of uncertainty
B. decision-making condition ý state of risk
C. state of certainty -✔ ✔ C
Light On! Power Company (LO!PO) is nearing capacity at its current St. Doraldo plant. For the
past three months, the general manager has been considering the acquisition and conversion
of a nearby production facility to increase LO!PO's output. He is only partially aware of the risks
and consequences associated with this option and has not yet evaluated all of his options. The
general manager is making a decision under conditions of ___.
A. uncertainty
B. programmed decision-making
C. risk
D. certainty -✔ ✔ A
The site manager for a company is negotiating for a new site to build an office complex. After
several counter-offers, the seller gave the company a final offer. The manager has the option to
accept or reject the offer. If the manager accepts the offer, he gets a site in time to meet the
relocation schedule, but at a price above budget. If he rejects the contract, he may get a more
favorable price if the seller is bluffing, but he may lose out on the location and not be able to
find another one in time if it is not. The manager is making a decision in a state of ___.
A. uncertainty
B. ambiguity
C. risk
D. certainty -✔ ✔ C
,The decision-making process begins by ___.
A. choosing the best alternative
B. defining the decision situation
C. putting the chosen alternative into action
D. identifying alternatives -✔ ✔ B
Janice is the owner of a beauty salon. Her shop operates in a leased property on Main Street.
The owner of the building plans to convert the property into a dog grooming shop. Now Janice
has to select a new location for her beauty salon. She is using a rational decision making
model to evaluate the alternatives before her. Each of her four options is feasible and satisfies
her decision criteria. Which of the following options should Janice choose?
A. Option B, which has high financial costs and low nonfinancial costs
B. Option C, which has low financial costs and low nonfinancial costs
C. Option D, which has high financial costs and high nonfinancial costs
D. Option A, which has low financial costs and high nonfinancial costs -✔ ✔ B
Which of the following is true of decision makers in the classical decision model?
A. They can effectively eliminate certainty to achieve a decision condition of uncertainty.
B. They evaluate all aspects of the decision situation intuitively.
C. They have no information about the possible alternatives.
D. They have complete information about the decision situation. -✔ ✔ D
Blair works at a convenience store. One of the three slushy machines in the store has
clogged four times this week. Blair is weighing the advantages and disadvantages of each of
her three choices: repair the machine again, replace it, or simply remove it and be left with
only two machines. Blair is currently ___.
A. evaluating alternatives
B. recognizing and defining the decision situation
C. implementing an alternative
, D. identifying alternatives -✔ ✔ A
Which of the following is a recommendation made by the proponents of evidence-
based management?
A. Discourage experimentation.
B. Avoid basing decisions on what has been done in the past.
C. Discourage learning by doing.
D. Avoid telling unpleasant truths. -✔ ✔ B
What is escalation of commitment?
A. the tendency to search for alternatives only until one is found that meets some
minimum standard of sufficiency
B. the tendency of decision makers to become so committed to the courses of action
suggested by those decisions that they stay with them, even when the decisions appear to
have been wrong
C. a concept suggesting that decision makers are limited by their values and
unconscious reflexes, skills, and habits
D. an informal alliance of individuals or groups formed to achieve a common goal -✔ ✔ B
WholePath Cereals introduced a new line of whole grain cereal for children. For the second
quarter in a row, sales are well below forecast. Formal surveys have shown that customers do
not like the taste of the cereal, and even those who bought it once are not repeat customers.
WholePath invested a lot of money in developing the new recipe, as well as in marketing to roll
out the new product line. They cannot afford to lose that investment, so they have increased
their advertising budget to try to increase enthusiasm about the product and generate
additional sales. Which of the following concepts is illustrated in the scenario?
A. escalation of commitment
B. satisficing
C. classical decision making
D. rational decision making -✔ ✔ A
