In Making an Estimate of the Most Pessimistic Time for an Activity

question 68

Multiple Choice

In making an estimate of the most pessimistic time for an activity, a manager deliberately estimates this time too high (i.e., longer than it should be) . What is the result of this action, assuming the beta distribution is being used to make time estimates?

• A) The expected time for this activity will be larger than it should be.
• B) The beta distribution will be symmetric around its mean.
• C) The most likely time for this activity will be larger than it should be.
• D) The variance of the activity will be smaller than it should be.

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Definitions:

Market Failures

Situations where the allocation of goods and services by a free market is not efficient, often leading to a loss of economic value.

Property Rights

Legal rights to possess, use, and dispose of assets, including real property or intellectual property, ensuring control and economic benefits to the rights holder.

External Costs

Costs of a transaction or activity that affect parties who are not directly involved in it, such as pollution affecting the wider community.

Law of Demand

The principle that, all else being equal, an increase in the price of a good will decrease the quantity demanded, and a decrease in price will increase the quantity demanded.