Question 5
The equal likelihood criterion assigns a probability of 0.5 to each state of nature, regardless of how many states of nature there are.
Answer

True

False

2 points

Question 6
The Hurwicz criterion is a compromise between the minimax and minimin criteria.
Answer

True

False

2 points

Question 7
The maximin approach involves choosing the alternative with the highest or lowest payoff.
Answer

True

False

2 points

Question 8
The metropolitan airport commission is considering the establishment of limitations on noise pollution around a local airport. At the present time, the noise level per jet takeoff in one neighborhood near the airport is approximately normally distributed with a mean of 100 decibels and a standard deviation of 3 decibels. What is the probability that a randomly selected jet will generate a noise level of more than 105 decibels?
Answer
0.0228
0.0475
0.0485
0.0500

2 points

Question 9
Assume that it takes a college student an average of 5 minutes to find a parking spot in the main parking lot. Assume also that this time is normally distributed with a standard deviation of 2 minutes. Find the probability that a randomly selected college student will take between 2 and 6 minutes to find a parking spot in the main parking lot.
Answer
0.1950
0.4772
0.4332
0.6247

2 points

Question 10
A professor would like to utilize the normal distribution to assign grades such that 5% of students receive A's. If the exam average is 62 with a standard deviation of 13, what grade should be the cutoff for an A? (Round your answer.)
Answer
80
83
90
93

2 points

Question 11
A business owner is trying to decide whether to buy, rent, or lease office space and has constructed the following payoff table based on whether business is brisk or slow. If the probability of brisk business is .40 and for slow business is .60, the expected value of perfect information is:
Answer
12
55
57
69

2 points

Question 12
Determining the worst payoff for each alternative and choosing the alternative with the best worst is called
Answer
maximax
minimin
maximin
minimax

2 points

Question 13
The maximin criterion results in the
Answer
minimum of the maximum payoffs
maximum of the maximum payoffs
maximum of the minimum payoffs
minimum of the minimum payoffs

2 points

Question 14
A group of friends are planning a recreational outing and have constructed the following payoff table to help them decide which activity to engage in. Assume that the payoffs represent their level of enjoyment for each activity under the various weather conditions. Weather Cold Warm Rainy S1 S2 S3Bike: A1 10 8 6Hike: A2 14 15 2Fish: A3 7 8 9 What is the conservative decision for this situation?
Answer
A1
A2
A3
Any of the above

2 points

Question 15
A brand of television has a lifetime that is normally distributed with a mean of 7 years and a standard deviation of 2.5 years. What is the probability that a randomly chosen TV will last more than 8 years? Note: Write your answers with two places after the decimal, rounding off as appropriate.
Answer

2 points

Question 16
A life insurance company wants to update its actuarial tables. Assume that the probability distribution of the lifetimes of the participants is approximately a normal distribution with a mean of 71 years and a standard deviation of 3.5 years. What proportion of the plan participants are expected to see their 75th birthday? Note: Write your answers with two places after the decimal, rounding off as appropriate.
Answer

2 points

Question 17
The quality control manager for ENTA Inc. must decide whether to accept (a1), further analyze (a2) or reject (a3) a lot of incoming material. Assume the following payoff table is available. Historical data indicates that there is 30% chance that the lot is poor quality (s1), 50 % chance that the lot is fair quality (s2) and 20% chance that the lot is good quality (s3). What is the numerical value of the maximin?
Answer

2 points

Question 18
A manager has developed a payoff table that indicates the profits associated with a set of alternatives under 2 possible states of nature. Alt S1 S2 1 10 2 2 -2 8 3 8 5 What is the highest expected value? Assume that the probability of S2 is equal to 0.4.
Answer

2 points

Question 19
A business owner is trying to decide whether to buy, rent, or lease office space and has constructed the following payoff table based on whether business is brisk or slow. If the probability of brisk business is .40, what is the numerical maximum expected value?
Answer

2 points

Question 20
A group of friends are planning a recreational outing and have constructed the following payoff table to help them decide which activity to engage in. Assume that the payoffs represent their level of enjoyment for each activity under the various weather conditions. Weather Cold Warm Rainy S1 S2 S3Bike: A1 10 8 6Hike: A2 14 15 2Fish: A3 7 8 9 If the probabilities of cold weather (S1), warm weather (S2), and rainy weather (S3) are 0.2, 0.4, and 0.4, respectively what is the EVPI for this situation?
Answer If two events are not mutually exclusive, then P(A or B) = P(A) + P(B) Answer

True

False