IS 242 Final Exam
Comprehensive Questions with
Verified Answers Graded A+
A tabular presentation that shows the outcome for each decision alternative under the various
states of nature is called: A) a payback period matrix. B) a payoff table. C) a decision tree. D) a
decision matrix. - Answer: B
Diff: 1
Keywords: payoff
The difference between expected payoff under certainty and expected value of the best act
without certainty is the:
A) expected monetary value. B) expected value of perfect information.
C) expected rate of return. D) expected net present value. - Answer: B
Diff: 1
Keywords: expected value of perfect information
A company that manufactures designer jeans is contemplating whether to increase its
advertising budget by $1 million for next year. If the expanded advertising campaign is
successful, the company expects sales to increase by $1.6 million next year. If the advertising
campaign fails, the company expects sales to increase by only $400,000 next year. If the
advertising budget is not increased, the company expects sales to increase by $200,000. Identify
the states of nature in this decision making problem. A) Two possibilities: (1) campaign is
successful and (2) campaign is not successful. B) The increase in sales dollars next year.
,C) Two choices: (1) increase the budget and (2) do not increase the budget. D) Four
consequences resulting from the Increase/Do Not Increase and Successful/Not Successful
combinations. - Answer: A
Diff: 1
Keywords: states of the world
A company that manufactures designer jeans is contemplating whether to increase its
advertising budget by $1 million for next year. If the expanded advertising campaign is
successful, the company expects sales to increase by $1.6 million next year. If the advertising
campaign fails, the company expects sales to increase by only $400,000 next year. If the
advertising budget is not increased, the company expects sales to increase by $200,000. Identify
the actions in this decision making problem. A) Two choices: (1) increase the budget and (2) do
not increase the budget. B) The increase in sales dollars next year. C) Four consequences
resulting from the Increase/Do Not Increase and Successful/Not Successful combinations. D)
Two possibilities: (1) campaign is successful and (2) campaign is not successful. - Answer: A
Diff: 1
Keywords: courses of action
A company that manufactures designer jeans is contemplating whether to increase its
advertising budget by $1 million for next year. If the expanded advertising campaign is
successful, the company expects sales to increase by $1.6 million next year. If the advertising
campaign fails, the company expects sales to increase by only $400,000 next year. If the
advertising budget is not increased, the company expects sales to increase by $200,000. Identify
the outcomes in this decision making problem. A) Four consequences resulting from the
Increase/Do Not Increase and Successful/Not Successful combinations. B) Two choices: (1)
increase the budget and (2) do not increase the budget.
C) Two possibilities: (1) campaign is successful and (2) campaign is not successful. D) The
increase in sales dollars next year. - Answer: A
Diff: 1
Keywords: outcomes
, A company that manufactures designer jeans is contemplating whether to increase its
advertising budget by $1 million for next year. If the expanded advertising campaign is
successful, the company expects sales to increase by $1.6 million next year. If the advertising
campaign fails, the company expects sales to increase by only $400,000 next year. If the
advertising budget is not increased, the company expects sales to increase by $200,000. Identify
the objective in this decision making problem.
A) Four consequences resulting from the Increase/Do Not Increase and Successful/Not
Successful combinations. B) The increase in sales dollars next year. C) Two choices: (1) increase
the budget and (2) do not increase the budget. D) Two possibilities: (1) campaign is successful
and (2) campaign is not successful. - Answer: B
Diff: 1
Keywords: objective
The following payoff table shows profits associated with a set of 3 alternatives under 2 possible
states of nature.
States A1 A2 A3
1 12 -2 8
2 4 10 5
where: S1 is state of nature 1 A1 is action alternative 1 S2 is state of nature 2 A2 is action
alternative 2 A3 is action alternative 3
Referring to Table 17-1, the opportunity loss for A3 when S2 occurs is
A) 4 B) 5 C) 0 D) 6 - Answer: B
Diff: 2
Keywords: opportunity loss
The following payoff table shows profits associated with a set of 3 alternatives under 2 possible
states of nature.
States A1 A2 A3
Comprehensive Questions with
Verified Answers Graded A+
A tabular presentation that shows the outcome for each decision alternative under the various
states of nature is called: A) a payback period matrix. B) a payoff table. C) a decision tree. D) a
decision matrix. - Answer: B
Diff: 1
Keywords: payoff
The difference between expected payoff under certainty and expected value of the best act
without certainty is the:
A) expected monetary value. B) expected value of perfect information.
C) expected rate of return. D) expected net present value. - Answer: B
Diff: 1
Keywords: expected value of perfect information
A company that manufactures designer jeans is contemplating whether to increase its
advertising budget by $1 million for next year. If the expanded advertising campaign is
successful, the company expects sales to increase by $1.6 million next year. If the advertising
campaign fails, the company expects sales to increase by only $400,000 next year. If the
advertising budget is not increased, the company expects sales to increase by $200,000. Identify
the states of nature in this decision making problem. A) Two possibilities: (1) campaign is
successful and (2) campaign is not successful. B) The increase in sales dollars next year.
,C) Two choices: (1) increase the budget and (2) do not increase the budget. D) Four
consequences resulting from the Increase/Do Not Increase and Successful/Not Successful
combinations. - Answer: A
Diff: 1
Keywords: states of the world
A company that manufactures designer jeans is contemplating whether to increase its
advertising budget by $1 million for next year. If the expanded advertising campaign is
successful, the company expects sales to increase by $1.6 million next year. If the advertising
campaign fails, the company expects sales to increase by only $400,000 next year. If the
advertising budget is not increased, the company expects sales to increase by $200,000. Identify
the actions in this decision making problem. A) Two choices: (1) increase the budget and (2) do
not increase the budget. B) The increase in sales dollars next year. C) Four consequences
resulting from the Increase/Do Not Increase and Successful/Not Successful combinations. D)
Two possibilities: (1) campaign is successful and (2) campaign is not successful. - Answer: A
Diff: 1
Keywords: courses of action
A company that manufactures designer jeans is contemplating whether to increase its
advertising budget by $1 million for next year. If the expanded advertising campaign is
successful, the company expects sales to increase by $1.6 million next year. If the advertising
campaign fails, the company expects sales to increase by only $400,000 next year. If the
advertising budget is not increased, the company expects sales to increase by $200,000. Identify
the outcomes in this decision making problem. A) Four consequences resulting from the
Increase/Do Not Increase and Successful/Not Successful combinations. B) Two choices: (1)
increase the budget and (2) do not increase the budget.
C) Two possibilities: (1) campaign is successful and (2) campaign is not successful. D) The
increase in sales dollars next year. - Answer: A
Diff: 1
Keywords: outcomes
, A company that manufactures designer jeans is contemplating whether to increase its
advertising budget by $1 million for next year. If the expanded advertising campaign is
successful, the company expects sales to increase by $1.6 million next year. If the advertising
campaign fails, the company expects sales to increase by only $400,000 next year. If the
advertising budget is not increased, the company expects sales to increase by $200,000. Identify
the objective in this decision making problem.
A) Four consequences resulting from the Increase/Do Not Increase and Successful/Not
Successful combinations. B) The increase in sales dollars next year. C) Two choices: (1) increase
the budget and (2) do not increase the budget. D) Two possibilities: (1) campaign is successful
and (2) campaign is not successful. - Answer: B
Diff: 1
Keywords: objective
The following payoff table shows profits associated with a set of 3 alternatives under 2 possible
states of nature.
States A1 A2 A3
1 12 -2 8
2 4 10 5
where: S1 is state of nature 1 A1 is action alternative 1 S2 is state of nature 2 A2 is action
alternative 2 A3 is action alternative 3
Referring to Table 17-1, the opportunity loss for A3 when S2 occurs is
A) 4 B) 5 C) 0 D) 6 - Answer: B
Diff: 2
Keywords: opportunity loss
The following payoff table shows profits associated with a set of 3 alternatives under 2 possible
states of nature.
States A1 A2 A3
