Making Decisions Under Risk

question 23

Multiple Choice

making decisions under risk

• A)maximizing expected value is always the best rule.
• B)mean variance analysis is always the best rule.
• C)the coefficient of variation rule is always best.
• D)maximizing expected value is best for making repeated decisions with identical probabilities.
• E)none of the above

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Definitions:

Variable Costs

Costs that vary directly with the level of production output or service delivery.

Mixed Costs

Costs comprising both constant and fluctuating elements, altering in aggregate with activity levels yet not in direct correlation.

Per Unit Basis

Calculations or measurements made by dividing the total by the number of units to find the amount corresponding to a single unit.

Fixed Costs

Expenses that do not change with the level of production or sales, such as rent and salaries.