A widely used approach that is used to recognize uncertainty about individual economic variables while obtaining an immediate financial estimate of the consequences of possible prediction errors is:
A) Expected value analysis
B) Learning curve analysis
C) Sensitivity analysis
D) Regression analysis

Question

Quizplus · Accepted Answer

Sensitivity analysis is the best choice in this case as it allows for the assessment of how changes in individual variables affect the overall financial estimates. It recognizes uncertainty through varying the input variables and calculating the resulting output. This provides insight into the potential impact of errors in the input variables on the output estimates. Expected value analysis, learning curve analysis, and regression analysis may not capture the full range of uncertainty and variability that sensitivity analysis can provide.

A Widely Used Approach That Is Used to Recognize Uncertainty