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BUSOBA 2321 Midterm

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2024/2025 Written for academic year
Institution BUSOBA 2321
Course BUSOBA 2321
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Exam of 5 pages for the course BUSOBA 2321 at BUSOBA 2321 (BUSOBA 2321 Midterm)

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BUSOBA 2321 Midterm



characteristics69of69a69good69decision69-69answer---based69on69logic
-considers69all69options69and69info69available
-sometimes69gives69unfavorable69results

569steps69of69the69decision69making69process69-69answer--1)69define69problem
2)69list69all69alternatives69(options,69rows)
3)69identify69outcomes69(states69of69nature,69columns)69for69each69alternative69
4)69identify69payoff69for69each69combo69of69alternatives69and69outcome
5)69pick69a69technique

profit69=69-69answer--revenue69-69cost

revenue69=69-69answer--Price69x69Quantity

costs69=69-69answer--fixed69costs69+69(quantity69x69variable69costs)

Profit69line69equation69-69answer--(P-VC)69x69Q69-69FC

break69even69point69graph69-69answer--FC=69intercept69
(P-VC)=69slope
x69intercept69=69break69even69point

indifference69point69-69answer--when69total69costs69are69equal69to69profit

indifference69point69equation69(with69price)69-69answer--(Pa-VCa)Q-FCa=(Pb-VCb)Q-
FCb

indifference69point69equation69(with69costs69only)69-69answer--FCa+VCa*Q=FCb+VCb*Q

Steps69to69calculating69indifference69point69-69answer--
1)69Determine69Equations69for69each69
2)69Set69each69equation69equal69to69each69other69and69solve69for69Q
3)69make69indifference69point69table,69set69test69points,69plug69back69into69equation
4)69determine69which69points69yield69the69highest69profit

MAXIMAX69-69answer--
optimistic,69choosing69biggest69return69option69(rows),69then69max69of69these69options

, MAXMIN69-69answer--
pessimistic,69choosing69the69smallest69return69option69(rows),69then69take69the69max69of
69these69options


MINIMAX69Regret69-69answer--
1)69find69best69outcome69for69each69state69of69nature69(column)
2)69determine69the69regret69for69each69combo69
69-69what69you69could69have69had69-69what69you69got69aka
69best69payoff69-69actual69payoff
3)69find69the69max69regret69of69each69option69(row)
4)69take69the69min69of69these69max'sperfec

EMV69stands69for69-69answer--expected69monetary69value

EMV69's69are69-69answer--the69lines69on69your69graph

how69to69find69EMV69-69answer--Value69(p)69+69Value69(p-1)

EMV69Max69-69answer--range69of69solutions69

ex:

069<=69p69<=69.369A
.369<=69p69<=69.769B
.769<=69p69<=69169C

-69find69these69by69setting69EMV's69=69to69each69other
-
69this69is69the69line69that69is69made69when69all69EMV's69are69graphed69and69you69are69lo
oking69at69the69maximum69solutions

EVwPI69means69-69answer--expected69value69with69perfect69info69
-69perfect69info69would69tell69us69with69certainty69what69outcome69is69going69to69occur

EVwPI69is69what69on69a69graph69-69answer--
A69line69created69by69connecting69the69two69highest69points69on69either69side69of69the69y
69axis's


EVwPI69calculation69-69answer--Slope69+69y69int
Slope69=69Rise69/69Run69(run69=691-069bc69probability69from690-169is69on69the69x69axis)
Y69int69=69look69at69point69on69graph69(left69y69int.)

EVPI69means69-69answer--
expected69value69of69perfect69info69(aka69cost69of69perfect69info)

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