Fairco, a Family Business, Is Considering Making an Investment in Its

question 34

Multiple Choice

Fairco, 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 Fairco 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:

Patrilineal Descent

A system of lineage tracing in which an individual's family membership derives from and is recorded through his or her father's line.

Descent Confers Authority

A principle in certain societies where social status, rights, and leadership roles are determined by one's lineage or family heritage.

Phratry

A social unit or grouping larger than a family but smaller than a tribe, often linked by common descent, marriage, or ritual.

Unilineal Descent Group

A kinship group in which membership is inherited through either the maternal or paternal line only.