A Family Business Is Considering Making an Investment in Its

question 56

Multiple Choice

A family business is considering making an investment in its manufacturing operation. Three decisions are under consideration: (1) a large investment; (2) a medium investment; and (3) a small investment. The business believes that there are three possible future outcomes for its product: (1) increasing demand; (2) stable demand; and (3) decreasing demand. The following payoff table describes the decision situation: The best decision for the business using the maximin criterion would be to

• A) make the large investment.
• B) make the medium investment.
• C) make the small investment.
• D) choose stable demand.

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Definitions:

Excuse Performance

A legal doctrine that allows a party to be released from a contractual obligation when events beyond their control prevent them from performing.

Rejection Is Ineffective

A legal principle indicating that simply refusing or rejecting an offer or contract does not nullify or void its terms or its potential effects.

Notifies The Seller

The act of informing the seller about relevant information or decisions, typically in a commercial transaction.

Right To Inspect

The right to inspect allows one party to a transaction, typically the buyer, to examine goods or property before finalizing the purchase to ensure they meet specified criteria or quality.