Question 15

Consider the following payoff table that represents the profits earned for each alternative (A, B, and C) under the states of nature S1, S2, and S3.

S1 S2 S3

A $60 $145 $120 B $75 $125 $110

C $95 $85 $130

Refer to the payoff table. Using the maximax criterion, what would be the highest expected payoff?

a.$145

b.$120

c.$110

d.$124

Question 16

Consider the following payoff table that represents the profits earned for each alternative (A, B, and C) under the states of nature S1, S2, and S3.

S1 S2 S3

A $60 $145 $120 B $75 $125 $110

C $95 $85 $130

Refer to the payoff table. What is the expected value under certainty? Assume P(S1) = 0.5 and P(S2) = 0.25.

a.$103.33

b.$101.25

c.$108.33

d.$116.25

Question 17

Which of the following models is a picture or drawing of reality?

a.scale model

b.mathematical model

c.physical model

d.schematic model