A Decision-Maker Using the Maximax Criterion on the Problem Below

question 61

Multiple Choice

A decision-maker using the maximax criterion on the problem below would choose Alternative __________ because the maximum of the row maximums is __________. $$~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~{ \text { States of Nature } } \\\begin{array} { | l | c | c | c | } \hline & 1 & 2 & 3 \\\hline \text { Alternative A } & 50 & 55 & 60 \\\hline \text { Alternative B } & 30 & 50 & 80 \\\hline \text { Alternative C } & 70 & 80 & 70 \\\hline \text { Alternative D } & - 100 & - 10 & 140 \\\hline\end{array}$$

• A) A; 60
• B) B; 80
• C) C; 70
• D) D; -100
• E) D; 140

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Definitions:

Marginal Cost Element

An increase in total cost that results from producing one additional unit of a good or service.

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