Dianna Ivy 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 different possible scenarios or states of nature that can affect the success of the expansion plan. As Dianna cannot control the price of coal, it is considered a factor outside the decision-maker's control, and therefore it cannot be considered a decision alternative or a payoff. The probabilities of these different states of nature may be revised based on new information or events, but they are not necessarily "prior" probabilities.

Dianna Ivy Is Evaluating a Plan to Expand the Production