The level of doubt regarding the decision situation where both the possible states of nature and their exact probabilities of occurrence are known is which of the following?
A) risk
B) uncertainty.
C) ignorance
D) expected payoff
E) state of nature

Question

Quizplus · Accepted Answer

In this situation, the decision maker has knowledge of both possible states of nature and their exact probabilities of occurrence, which means that there is some degree of quantifiability of the outcomes. This level of quantifiability, where the outcomes of different choices can be evaluated and compared based on their expected payoffs, is known as risk. Therefore, the correct answer is choice letter A, which represents risk.

The Level of Doubt Regarding the Decision Situation Where Both