When a Project Team Elects to Purchase Insurance,or Adopts a Fixed

question 36

Multiple Choice

When a project team elects to purchase insurance,or adopts a fixed price contract with a vendor,or hires external experts - it is demonstrating which of the following risk response strategies?

• A) avoid a threat
• B) transfer a threat
• C) mitigate a threat
• D) assume a threat

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Definitions:

Constrained Optimization

The process of finding the maximum or minimum value of a function subject to certain constraints, common in economics to find the optimal resource allocation.

Cobb-Douglas

A form of production function that represents the relationship between two or more inputs (typically labor and capital) and the amount of output produced, characterized by constant returns to scale and substitution between inputs.

Constrained Optimization

The process of finding the optimal solution or outcomes within given limitations or constraints.

Maximizing Utility

Refers to the economic principle where individuals or firms seek to get the highest level of satisfaction from their resources.