SCENARIO 19-6
a Student Wanted to Find Out the Optimal

question 42

True/False

SCENARIO 19-6
A student wanted to find out the optimal strategy to study for a Business Statistics exam. He
constructed the following payoff table based on the mean amount of time he needed to study every
week for the course and the degree of difficulty of the exam. From the information that he gathered
from students who had taken the course, he concluded that there was a 40% probability that the exam
would be easy. $$\begin{array} { | l | l | l | l | } \hline & 16 \text { hours } & 8 \text { hours } & 4 \text { hours } \\\hline \text { Easy Exam } & 40 & 60 & 80 \\\hline \text { Difficult Exam } & 100 & 50 & 0 \\\hline\end{array}$$
-Referring to Scenario 19-6, the optimal strategy using the maximax criterion is to
study 16 hours per week on average for the exam.

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Definitions:

Natural Capital

The world's stocks of natural assets including geology, soil, air, water and all living organisms.

Pollution Cleanup Costs

The expenses associated with removing pollutants from the environment and restoring natural conditions.

Social Costs

The total cost to society due to an activity or industry, including both direct costs and indirect effects on the environment and human health.

Optimal Level

The most favorable or efficient point or degree of a particular process or condition.