I want to know if I have correctly answered the given questions. If not please explain why: Our book is Managerial Economics 8th edition.
Question 1. A probability distribution:
a. is a way of dealing with uncertainty
b. lists all possible outcomes & the corresponding probabilities of occurrence
c. shows only the most likely outcome in an uncertain situation
d. both a & b
e. both a & c
Question 2. The variance of a probability distribution is used to measure risk because a higher variance is associated with:
a. a wider spread of values around the mean
b. a more compact distribution
c. a lower expected value
d. both a & b
e. all of the above
Question 3. Risks exists when:
a. all possible outcomes are known but probabilities can't be assigned to the outcomes
b. all possible outcomes are known & probabilities can be assigned to each
c. all possible outcomes are known but only objective probabilities can be assigned to each
d. future events can influence the payoffs but the decision maker has some control over their probabilities
e. c & d
Question 4. When a manager can list all outcomes & assign probabilities to each:
a. uncertainty exists
b. both risk and uncertainty exists
c. risks exists
d. the manager should use the minimax rule for making a decision
e. b & d
Question 5. Subjective probabilities are:
a. determined from actual data on past experiences
b. used in the presence of uncertainty
c. almost never used from decision making
d. are based on feelings or hunches
e. c & d