Exhibit 14.8 The Following Questions Use the Information Below

question 95

Multiple Choice

Exhibit 14.8
The following questions use the information below.
A company needs to buy a new insurance policy. They have three policies to choose from, A, B and C. The policies differ with respect to price, coverage and ease of billing. The company has developed the following AHP tables for price and summary. The other tables are not shown due to space limitations.
-A circular node in a decision tree is called a(n) ____ node.

• A) chance
• B) random
• C) decision
• D) event

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Definitions:

Budget Constraint

Constraints on the assortments of products and services available for purchase by a consumer, determined by their financial resources and market prices.

Tangent

A straight line that touches a curve at a single point without crossing it, often used to find the slope of the curve at that point.

Substitution Effect

The change in the quantity demanded of a good that results from a change in price, making the good more or less expensive relative to other goods.

Wage Increase

An upward adjustment in the amount of money that workers are paid per hour, day, or work performed.