A Family Business Is Considering Making an Investment in Its

question 27

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 minimax regret decision criterion would be to

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

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Definitions:

Interferes

To come or place oneself between, often to obstruct or hinder progress or activity.

Harmless Object

An item that is not likely to cause injury or damage.

Theoretical Problem

An issue or question that arises within the context of a theoretical framework, often requiring conceptual analysis or abstraction.

Watson's Analysis

Refers to the approach and findings from psychological studies by John B. Watson, particularly his work on behaviorism and the theory that human and animal behavior can be understood in terms of conditioning.