The table shows the hypothetical trade-off between different combinations of Stealth Bombers and B-1 Bombers thatmight be produced in a year with the limited U.S. capacity, ceteris paribus.Production Possibilities for BombersCombination Number of B-1Opportunity Cost(Foregone Stealth)ST0NANumber of Stealth10Opportunity Cost(Foregone B-1)19UV23In the production range of 7 to 9 Stealth bombers, the opportunity cost of producing 1 more Stealth Bomber in terms of B-1Bombers is74NAMultiple Choice0.3.0.5.2.

The opportunity cost of producing more of one good is decrease in the production of another good…

Answered: The table shows the hypothetical…

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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1. A builder has located a piece of property that she would like to buy and eventually build on. The land is currently zoned for four homes per acre, but she is planning to request new zoning. What she builds depends on approval of zoning requests and your analysis of this problem to advise her. With her input and your help, the decision process has been reduced to the following costs, alternatives, and probabilities: Cost of land: $2 million. Probability of rezoning: 0.60. If the land is rezoned, there will be additional costs for new roads, lighting, and so on of $1 million. If the land is rezoned, the contractor must decide whether to build a shopping center or 1,500 apartments that the tentative plan shows would be possible. If she builds a shopping center, there is a 70 percent chance that she can sell the shopping center to a large department store chain for $4 million over her construction cost, which excludes the land; and there is a 30 percent chance that she can sell it to an…
Classify the following risks into variation, foreseen uncertainty, unforeseen uncertainty, and chaos:g. The Second World War caused auto manufacturers to switch to producingmilitary vehicles.
2 true or false If the decision doesn’t involve risk and uncertainty, utility is the numerical score to measure the attractiveness of a course of action.
A company is considering whether to develop and market a particular product. There is 40% probability that the research and development department will come up with a viable product, and a 60% probability that the product will be scrapped. The cost of undertaking the research and development is 200 000. If the product development is successful, the company will build a plant. The product demand is unknown, and the company has the choice of building a large or small plant. The expected demand and the net present value is shown below: High Demand Low Demand ACTION Probability 75% Probability 25% Large Plant N$1 600 000 N$400 000 Small Plant N$1 000 000 N$1 000 000 Required: Advise the company on the most beneficial course of action using a decision tree.
1. A clothing store is opening a second location and wants to decide whether to open in San Francisco or New York. Opening a location in either city will involve different capital expenditures and demonstrate different rates of success. Below are the relevant data: DECISION PROBABILITY OF PROBABILITY OF SUCCESS FAILURE San Francisco 40% 60% New York 30% 70% PAYOFF (SUCCESS) 15,000,000 30,000,000 PAYOFF (FAILURE) 4,000,000 10,000,000 DECISION San Francisco New York The costs associated with opening each location are as follows: in San Francisco, the store will need to invest $2 million, while a New York location will require an investment of $5 million. The expected payoff amounts represent the potential revenue if the store succeeds, or the potential loss if the store fails. REQUIRED: a. Draw the decision tree for the above problem; b. Compute for the Expected Value for each decision; c. Compute for the net gain / loss of each decision
A decision maker faces with the following four alternatives and four states of nature in the profit payoff table below: B. Cal D. Calculate the expected value of perfect to the nearest integer: 1, A2, A3, or A4. 3 States of nature S3 8 0.1
The computer manufacturer Skynet is relatively new in the industry. Their stated mission was the innovation of mobile computing for a better future. For the past 8 years they have been producing laptops, with the latest model the T-1000 released at the start of last year. Summary of Sales per model (in thousand $) 245 Skynet T-101 Skynet T-600 359 Skynet T-700 371 Skynet T-800 533 Skynet T-850 303 Skynet T-1000 218 What was the sales percentage for their latest model laptop? note: write the number with at most 2 decimal places without the unit (eg. 95.17 and NOT 95.17%)
Lakewood Fashions must decide how many lots of assorted ski wear to order for its three stores. Information on pricing, sales, and inventory costs has led to the following payoff table, in thousands. Order size 2 lots 1 lot 1 lot 3 lots (a) Show a regret table. Order size 2 lots 3 lots Low 13 9 6 Low Demand Medium 16 23 38 High 16 38 61 Demand Medium (b) What decision should be made by the optimist? O 1 lot O2 lots O 3 lots (c) What decision should be made by the conservative? O 1 lot O 2 lots O3 lots (d) What decision should be made using minimax regret? O 1 lot O2 lots O 3 lots High Maximum Regret
Aaron is considering potential
There are two outcomes: a good market and a bad market. , The decision table is presented below. There are four alternatives: do nothing, build a small plant, build a medium-size plant, and build a large plant. PAYOFFS Outcomes Alternatives Good market Bad market Do nothing $0 $0 Small Plant $30,000 ($10,000) Medium Plant $100,000 ($15,000) Large Plant $200,000 ($30,000) So you are to workout the Maximax, the Maximin, the Equally likely the Hurwicz based on a .11 probability and the regret using minimax. In words give the answers to these questions: What are your answers under: Answers Best payoff option for maximax is Common Stock Best payoff option for maximin is doing nothing Best payoff option for equally likely is Common Stock Best payoff option for Hurwicz is doing nothing Put a Bold Box around the word Outcomes Keep the Bad Market amounts in Red Ink Make the type style Ariel and Size 12 in Black
No probabilities are known for the occurrence of the nature states. Compare the solutions obtained by each of the following criteria: Savage
Edwards Machine Tools needs to purchase a new machine. The basic model is slower but costs less, while the advanced model is faster but costs more. Profitability will depend on future demand. The following table presents an estimate of profits over the next three years. Decision Low Medium High Basic Model $75,000 $95,000 $120,000 Advanced Model $60,000 $150,000 $260,000 Given the uncertainty associated with the demand volume and no other information to work with, how would you make a decision? Use the Excel template Decision Analysis and explain your reasoning.

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