Dianna Young is evaluating a plan to expand the production facilities of International Compressors Company which manufactures natural gas compressors.Dianna feels that the price of coal is a significant factor in her decision, but she cannot control it.For her decision, the different prices of coal represent the ___.
A)payoffs
B)decision alternatives
C)states of nature
D)revised probabilities
E)prior probabilities

Question

Quizplus · Accepted Answer

The different prices of coal represent the states of nature, as they are uncertain events that can affect the outcome of the decision. Payoffs are the outcomes associated with each combination of decision and state of nature, decision alternatives are the options available to the decision-maker, revised probabilities are probabilities that have been updated based on new information, and prior probabilities are the initial probabilities of each state of nature before any information is obtained.

Dianna Young Is Evaluating a Plan to Expand the Production