Data collected over a five year period in a capital city of a large country reveals that out of 328 new restaurants that were opened only 174 survived for at least a year. This suggests that the...

Data collected over a five year period in a capital city of a large country reveals that out of 328 new restaurants that were opened only 174 survived for at least a year. This suggests that the probability of a restaurant surviving for at least a year is only 0.53. This is an example of a:

Group of answer choices

Classical probability

Relative frequency probability

Subjective probability

Conditional probability

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Question 2
10 pts

Which one of these pairs of events is mutually exclusive?

Group of answer choices

The UK subsidiary of a company makes a loss next year. The Brazilian subsidiary of the company makes a loss next year

Compared to the previous year, the number of passengers using Sydney airport falls in March next year. Compared to the previous year, the number of passengers using Sydney airport rises in April next year

A company suffers a strike in the next 12 months. A new CEO is appointed to lead the company during the next 12 months

The total number of new wind farms built in Scotland next year exceeds four. The total number of new wind farms built in Scotland next year is less than three.

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Question 3
10 pts

The probability that a machine will breakdown in the course of the next year as a result of an electrical fault is 0.1. The probability that it will breakdown in this period as a result of a mistake by the operator is 0.05. These two events are independent. The probability that both events will occur is:

Group of answer choices

0.150

0.145

0.005

0.855

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Question 4
10 pts

The probability of a call center receiving over 400 calls on any given day is 0.2. If it does receive this number of calls the probability of the center missing the day’s target on average caller waiting times is 0.7. If 400 calls or less are received the probability of missing this target is 0.1. The probability that the target will be missed on a given day is:

Group of answer choices

0.20

0.14

0.22

0.70

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Question 5
10 pts

The number of trains per day that arrive at a destination more than ten minutes late follows the following probability distribution.

The expected number of trains per day arriving more than ten minutes late is:

Group of answer choices

2.0

2.15

2.25

3.0

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Question 6
10 pts

A company has to decide whether or not to continue with plans to run a conference next June in a hotel. If it decides to continue then it will either make a profit of $1 million or lose $0.8 million. It if decides to cancel it will either lose $0.2 million in compensation payments to participants or, if it is also sued by the hotel, lose a total of $0.6 million. According to the maximin criterion the company should:

Group of answer choices

Estimate probability for the different payoffs before applying the criterion

Continue with the event

Be indifferent between continuing with the event of cancelling it

Cancel the event

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Question 7
10 pts

A company has to decide whether or not to continue with plans to run a conference next June in a hotel. The probability of a profit of $1 million if the company continues with the conference is 0.6. If it cancels the conference, the probability of losing only $0.2 million is 0.7. According to the expected monetary value (EMV) criterion the company:

Group of answer choices

Should continue with the event

Should be indifferent between continuing with the event or cancelling it

Should cancel the event

Will be unable to make a decision until other probability estimates are supplied

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Question 8
10 pts

A decision maker’s utilities for $1000, $2000 and $3000 are respectively, 0, 0.3 and 1.0. This indicates that the decision maker is:

Group of answer choices

Risk averse

Risk seeking

Risk neutral

Risk seeking when small sums of money are involved, but risk averse for larger sums

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Question 9
10 pts

A manager has to decide whether to launch product A or B. Product A has a 0.4 probability of producing a return of $2 million over the next year and a 0.6 probability of yielding a return of $0. It is thought that product B will certainly yield a return of $1.2 million over the next year. The manager’s utilities for the returns of $0, $1.2 million and $2 million are 0, 0.7, and 1.0, respectively. Which of these statements is correct?

Group of answer choices

The EMV and the expected utility criteria suggest that different products should be launched

Of the two products, product A has the lowest expected utility of 0

Of the two products, product A has the lowest expected utility of 0.4

Of the two products, product A has the highest expected monetary value of $0.8 million

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Question 10
10 pts

According to behavioral decision research, choices involving statements about gains:

Group of answer choices

Tend to produce risk-averse responses

Tend to produce risk-seeking responses

Tend to produce risk-neutral responses

Tend to produce less accurate responses than those involving losses