QUIZ | Decision Analysis

What is the main objective of decision analysis?

• To eliminate all uncertainty

• To make rational choices under uncertainty

• To predict the future perfectly

• To avoid making any decision

Which of the following represents a decision point in a decision tree?

• A square node

• A circle node

• A triangle

• An arrow

A chance node in a decision tree is represented by:

• A. A diamond

• B. A square

• C. A circle

• D. A rectangle

The outcome of a decision scenario is typically shown as:

• A process

• A branch

• A terminal node

• A loop

What is uncertainty in decision analysis?

• A. A known outcome

• B. A fixed value

• C. A situation where outcomes are not guaranteed

• D. An outcome with no consequence

In decision analysis, "states of nature" refer to:

• Choices made by the decision maker

• External conditions beyond control

• Government regulations

• Economic reports

What does Expected Value (EV) measure?

• The highest payoff

• The average expected return

• The worst-case loss

• The cost of decision-making

What is the formula for Expected Value?

• EV = Σ (Probability × Payoff)

• EV = Payoff / Probability

If an outcome has a 0.6 probability and yields ₱10,000,000, what is its contribution to EV?

• ₱1,000,000

• ₱6,000,000

• ₱16,000,000

• ₱4,000,000

The EV for an outcome with 40% chance and ₱0 payoff is:

• ₱4,000,000

• ₱10,000,000

• ₱0

• ₱40,000