Alternatives 1 and 2 in the Following Payoff Table Represent

question 75

Multiple Choice

Alternatives 1 and 2 in the following payoff table represent the two possible manufacturing strategies that the EKA manufacturing company can adopt.The level of demand affects the success of both strategies.The states of nature (S_i) represent the levels of demand for the company products.S₁,S₂,and S₃ characterize High,Medium,and Low demand,respectively.The payoff values are in thousands of dollars. $\begin{array}{lccc} &&\underline{{\text { States of nature }}} \\& s_{1} & s_{2} & s_{3} \\\text { Alternative (strategy) } 1 & 110 & 80 & 70 \\\text { Alternative (strategy) } 2 & 60 & 120 & 50\end{array}$


The best alternative (course of action) for the EKA manufacturing company using the maximin criterion is strategy _____ and the best possible payoff is __________.

• A)1,$50,000
• B)2,$120,000
• C)1,$100,000
• D)1,$70,000
• E)2,$80,000

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Definitions:

Tapes

Are thin strips of material, traditionally magnetic, used for recording sound, images, or data, though often supplanted by digital media.

Demand Functions

An equation that illustates the relationship between the price of a product and the quantity demanded by consumers.

Income Offer Curve

A graphical representation showing how changes in income affect the quantities of goods consumed, holding prices constant.

Prices

The monetary value necessary to acquire a good or service.