The Owner of Tastee Cookies Needs to Decide Whether to Lease

question 96

Multiple Choice

The owner of Tastee Cookies needs to decide whether to lease a small, medium, or large new retail outlet. She estimates that monthly profits will vary with demand for her cookies as follows: $\begin{array}{|l|l|l|l|}\hline\text {SIZE}\\\text {OF}&\text {DEMAND}\\\hline \text { OUTLET } & \text { LOW } && \text { HIGH } \\\hline \text { Small } & \$ 1,000 && 1,000 \\\hline \text { Medium } & 500 && 2,500 \\\hline \text { Large } & 0 && 3,000 \\\hline\end{array}$ If she uses the Laplace criterion, what size outlet will she decide to lease?

• A) small
• B) medium
• C) large
• D) either small or medium
• E) either medium or large

---

Definitions:

Difference Threshold

The minimum difference in stimulation that a person can detect 50% of the time, also known as the just noticeable difference (JND).

Electromagnetic Waves

Waves of the electromagnetic field, propagating through space, carrying electromagnetic radiant energy.

Stimulation

The action of arousing interest, excitement, or activity in someone or something.

Absolute Threshold

The minimum intensity of a stimulus that one can detect 50% of the time, a concept used in sensory and perception studies.