A Firm Is Considering the Decision of Investing in New

question 33

Multiple Choice

A firm is considering the decision of investing in new plants.The following is the profit payoff matrix under three conditions: it does not expand,it builds two new plants,or it builds one new plant.Three possible states of nature can exist--no change in the economy,the economy contracts and the economy grows.The firm has no idea of the probability of each state. What decision would be made using the maximax rule?

• A)no new plants
• B)one new plant
• C)two new plants
• D)not enough information to tell

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Definitions:

Hazardous Sites

Locations that contain dangerous or harmful substances posing potential risk to humans, wildlife, or the environment.

Comprehensive Environmental Response

Part of a federal program designed to manage and remediate hazardous waste sites under laws like the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA).

Material Spills

Refers to the accidental release of substances, often hazardous, into the environment.

Environmental Impact Statement

A document prepared to describe the effects proposed projects or actions may have on the environment and society.