Trey Leeman,Operations Manager at National Consumers,Inc

question 43

Multiple Choice

Trey Leeman,Operations Manager at National Consumers,Inc.(NCI) ,is evaluating alternatives for increasing capacity at NCI's Fountain Hill plant.He has identified four alternatives,and has constructed the following payoff table which shows payoffs (in $1,000,000's) for the three possible levels of market demand: If Trey uses the maximax criterion,the appropriate alternative would be: ___.

• A)lease new equipment
• B)purchase new equipment
• C)add third shift
• D)do nothing
• E)do everything

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Definitions:

Externality Analysis

The study of costs or benefits that affect parties who did not choose to incur that cost or benefit, typically used in the context of environmental and public policy.

Public Interest Theory

A theory suggesting that regulation is supplied in response to the demand of the public for the correction of inefficient or inequitable market practices.

Excise Tax

A tax on the sale or consumption of specific goods or services, such as tobacco, alcohol, and fuel.

Per Gallon

A unit of measurement used to quantify quantities, such as fuel efficiency or liquid commodity prices, based on volume per gallon.