Untitled Quiz

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What takes precedence in the evaluation of most ventures?

Social impact
Physical efficiency
Economic efficiency (correct)
Regulatory compliance

What is the first step in the six-step decision-making process?

Identify possible alternatives
Evaluate alternatives against the criteria
Develop criteria and a ranking system
Define the problem (correct)

Which is true about economic decision-making?

It does not require ranking criteria.
It requires establishing and classifying objectives. (correct)
It focuses solely on output levels.
It neglects the evaluation of results.

What is a key component of the rational model of decision-making?

Maximizing gains or minimizing losses (B) Signup and view all the answers

When evaluating alternatives during decision-making, what should be compared?

Alternatives against established criteria (B) Signup and view all the answers

What is indicated by the term 'minimum attractive rate of return' (MARR)?

The lowest acceptable return rate (D) Signup and view all the answers

Which step is NOT part of the decision-making process outlined?

Make a decision that suits the worst (A) Signup and view all the answers

What aspect does internal rate of return (IRR) primarily focus on?

Profitability of an investment over time (B) Signup and view all the answers

What does the expected value (EV) approach help to determine in decision making?

The best decision yielding the highest expected return (A) Signup and view all the answers

What is the expected value (EV) of choosing a medium complex based on given probabilities and payoffs?

11.5 (C) Signup and view all the answers

Which alternative would yield the highest expected profit based on the market research?

Medium (B) Signup and view all the answers

How is a decision under uncertainty characterized?

Several unknown futures without estimable probabilities (A) Signup and view all the answers

What defines the application of decision making under risk?

Probabilities of future outcomes can be estimated (A) Signup and view all the answers

In the context of the provided example, what states of nature were considered?

Low demand and high demand (C) Signup and view all the answers

What is the profit payoff for a large complex under low demand?

-11 (C) Signup and view all the answers

Which profit payoff corresponds to a small complex under high demand?

8 (B) Signup and view all the answers

What is the primary purpose of allocating weights to decision criteria in a selection process?

To prioritize the importance of different criteria (A) Signup and view all the answers

Which aspect is crucial when analyzing alternatives according to the decision criteria?

The differences between the alternatives (B) Signup and view all the answers

In the decision-making process, what should be considered alongside quantitative data when uncertainty exists?

Common sense and judgment (C) Signup and view all the answers

Why is it stated that groups can make better quality decisions?

Groups allow for diverse perspectives and expertise (A) Signup and view all the answers

What weight was assigned to 'Warranty Period' in the decision-making criteria?

5 (B) Signup and view all the answers

What is considered essential when evaluating the effectiveness of a decision?

Comparing results with initial expectations (A) Signup and view all the answers

What does the term 'Minimum Attractive Rate of Return (MARR)' refer to in economic investment decision making?

The least return an investor is willing to accept (C) Signup and view all the answers

What does the Internal Rate of Return (IRR) indicate in the context of investment evaluation?

The discount rate that makes the net present value of an investment zero (B) Signup and view all the answers

Economic Efficiency

Prioritizes the cost-benefit ratio over physical system output in project evaluations.

Problem Analysis

A systematic process of identifying performance issues, deviations from standards, and the probable causes.

Decision Making

A process of evaluating alternative actions to achieve targeted objectives, selecting the best course of action, and evaluating the outcome.

Six-Step Decision Making

A structured framework for decision-making encompassing problem definition, criteria establishment, alternative identification, evaluation, decision selection and evaluation of the result.