The new owner of a beauty shop is trying to decide whether to hire one, two, or three beauticians. She estimates that profits next year (in thousands of dollars) will vary with demand for her services, and she has estimated demand in three categories, low, medium, and high. $$\begin{array} { | l | l | l | l | }
\hline { \begin{array} { l }
\text { NUMBER } \
\text { OF } \
\text { BEAUTICIANS }
\end{array} } & { \text { DEMAND } } \
\hline & \text { LOW } & \text { MEDIUM } & \text { HIGH } \
\hline \text { One } & 50 & 75 & 100 \
\hline \text { Two } & 0 & 100 & 100 \
\hline \text { Three } & - 100 & 70 & 300 \
\hline
\end{array}$$ If she uses the maximax criterion, how many beauticians will she decide to hire?
A) one
B) two
C) three
D) either one or two
E) either two or three

Question

The new owner of a beauty shop is trying to decide whether to hire one, two, or three beauticians. She estimates that profits next year (in thousands of dollars) will vary with demand for her services, and she has estimated demand in three categories, low, medium, and high. $$\begin{array} { | l | l | l | l | } 
\hline { \begin{array} { l } 
\text { NUMBER } \
\text { OF } \
\text { BEAUTICIANS }
\end{array} } &   { \text { DEMAND } } \
\hline & \text { LOW } & \text { MEDIUM } & \text { HIGH } \
\hline \text { One } & 50 & 75 & 100 \
\hline \text { Two } & 0 & 100 & 100 \
\hline \text { Three } & - 100 & 70 & 300 \
\hline
\end{array}$$ If she uses the maximax criterion, how many beauticians will she decide to hire?
A) one
B) two
C) three
D) either one or two
E) either two or three

Quizplus · Accepted Answer

The maximax criterion is choosing the option with the highest possible payoff (best-case scenario).

If she hires one beautician, the maximum profit she can make is $100,000. 
If she hires two beauticians, the maximum profit she can make is also $100,000. 
If she hires three beauticians, the maximum profit she can make is $300,000.

Therefore, the new owner should choose option C and hire three beauticians, based on the maximax criterion.

The New Owner of a Beauty Shop Is Trying to Decide