1. Visual illusion demonstrate that objective facts are not so objective - what people perceive undergoes an interpretive process by the brain
a. True
b. False
2. What psychological sub-discipline examines how thinking affects decision making?
a. Cognitive psychology
b. Perceptual psychology
c. Personality
d. Social psychology
3. A high benefit/cost ratio is generally considered to be attractive. Following is a list describing circumstances where decisions makers might not want to support the project. Which item does not belong on the list?
a. Because the ratio "hides" the size of the benefits and costs, the project may be too small to warrant support
b. Other projects exist with more favorable benefit/cost ratios
c. The fact that benefits and costs are both estimates will yield unreliable results
d. The benefits derived from the project may arrive too far in the future to be attractive
4. Which statement is most true?
a. Costs are easier to assess than benefits
b. Benefits are easier to assess than costs
c. Unless benefits can be monetized, they have little value
d. Costs must be monetized
5. If the present value of revenue is $435, the present value of cost is $385, IRR = 12.5%, and NPV = $50, what is the profitability index?
a. 0.89
b. 7.89%
c. 1.13
d. 3.82
6. The Health Bureau of a state government decides to provide more funding to resolve diseases affecting children than diseases affecting the elderly. This approach illustrates which public/social decision making criterion?
a. Caldor Hicks criterion
b. Pareto criterion
c. Social welfare criterion
d. Ceteris paribus criterion
7. When using benefit/cost ratios created from monetized estimates of benefits and costs:
a. Considerations of estimation risk are minimized
b. The resulting ratios are unit-less numbers
c. There is a tendency to overstate benefits in relation to costs
d. There is a tendency to overstate costs in relation to benefits
8. From the perspective of SWOT analysis, which of the following is a threat?
a. The growing successes of our chief competitor
b. The mediocre leadership capabilities of our CEO
c. Our poor management of cash flow
d. Our delays in launching new products
9. One well-known approach to making decisions qualitatively is to make a list of pros and cons and see which dominates - after mulling on the decision for two or three days. This approach is called:
a. Poor Man's Hierarchy
b. SWOT
c. Benjamin Franklin's Rule
d. Buss's technique
10. From the perspective of SWOT analysis, which of the following is a strength?
a. The first-rate talent among our employees
b. A booming economy
c. An emerging market for our goods
d. New tax legislation which reduces our tax exposure
11. In making a decision on land-use in a suburban area, the county government resolves to avoid giving special treatment to any particular interest groups: all will be treated equally. This reflects which public/social decision making criterion?
a. Caldor Hicks criterion
b. Pareto criterion
c. Social welfare criterion
d. Ceteris paribus criterion