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1. What type of decision is Wes facing? 2. What decision criterion should he use? 3. What alternative is best?

1. What type of decision is Wes facing? 2. What decision criterion should he use? 3. What alternative is best?

Understanding Business
Understanding Business
12th Edition
ISBN:9781259929434
Author:William Nickels
Publisher:William Nickels
Chapter1: Taking Risks And Making Profits Within The Dynamic Business Environment
Section: Chapter Questions
Problem 1CE
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Wes Johnson is the principal owner of Johnson Oil, Inc. After quitting his university teaching job, Wes has been able to increase his annual salary by a factor of over 100. At the present time, Wes is forced to consider purchasing some more equipment for Johnson Oil because of competition. Wes' alternatives are as follows: Favorable Unfavorable Market Market Equipment ($) ($) Sub 100 300,000 -200,000 Oiler J 250,000 -100,000 Tеxan 75,000 -18,000 For example, if Wes purchases a Sub 100 and if there is a favorable market, he will realize a profit of $300,000. On the other hand, if the market is unfavorable, Wes will suffer a loss of $200,000. But Wes has always been a very optimistic decision maker. Questions:
Transcribed Image Text:Wes Johnson is the principal owner of Johnson Oil, Inc. After quitting his university teaching job, Wes has been able to increase his annual salary by a factor of over 100. At the present time, Wes is forced to consider purchasing some more equipment for Johnson Oil because of competition. Wes' alternatives are as follows: Favorable Unfavorable Market Market Equipment ($) ($) Sub 100 300,000 -200,000 Oiler J 250,000 -100,000 Tеxan 75,000 -18,000 For example, if Wes purchases a Sub 100 and if there is a favorable market, he will realize a profit of $300,000. On the other hand, if the market is unfavorable, Wes will suffer a loss of $200,000. But Wes has always been a very optimistic decision maker. Questions:
Questions: 1. What type of decision is VWes facing? 2. What decision criterion should he use? 3. What alternative is best?
Transcribed Image Text:Questions: 1. What type of decision is VWes facing? 2. What decision criterion should he use? 3. What alternative is best?
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