Page 289 - P1 Integrated Workbook STUDENT 2018

Supplementary objective test questions

5.6 A business has produced a profit table showing the profit earned depending on
a combination of units produced and units demanded:

Daily demand
20 30 40
20 $7,500 $7,500 $7,500

Production 30 $7,200 $8,250 $8,250
40 $6,900 $7,950 $9,000
Minimax regret matrix

Daily demand
20 30 40

20 ? ? X
Production 30 ? ? ?
40 ? ? ?

In the minimax regret table, the value at Point X is:

A $300

B $600

C $750

D $1,500

5.7 Which TWO of the following statements are true?

True?

As standard deviation increases risk decreases

Perfect information is always correct

A risk neutral investor typically ignores the range of possible
outcomes

Probabilities used in expected value calculations are objective

Imperfect information has no value

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