Instruction 17-2
The following payoff table shows profits associated with a set of three alternatives under two possible events.
$\begin{array} { c r r r }
States & A 1 & A 2 & A 3 \
\hline 1 & 12 & - 2 & 8 \
2 & 4 & 10 & 5
\end{array}$
where: $\quad S 1$ is event $1 \quad A 1$ is action alternative 1
$\quad\quad\quad\quad S 2$ is event $2 \quad A 2$ is action alternative 2
$\quad\quad\quad\quad\quad\quad\quad A 3$ is action alternative 3
-Referring to Instruction 17-2,the opportunity loss for A3 when S2 occurs is
A)5.
B)6.
C)4.
D)0.

Question

Instruction 17-2
The following payoff table shows profits associated with a set of three alternatives under two possible events.
$\begin{array} { c r r r } 
States & A 1 & A 2 & A 3 \
\hline 1 & 12 & - 2 & 8 \
2 & 4 & 10 & 5
\end{array}$
where: $\quad S 1$ is event $1 \quad A 1$ is action alternative 1 
$\quad\quad\quad\quad S 2$ is event $2 \quad A 2$ is action alternative 2 
$\quad\quad\quad\quad\quad\quad\quad A 3$ is action alternative 3
-Referring to Instruction 17-2,the opportunity loss for A3 when S2 occurs is
A)5.
B)6.
C)4.
D)0.

Quizplus · Accepted Answer

The opportunity loss for A3 when S2 occurs is the difference between the payoff for A3 and the payoff for the best alternative when S2 occurs. The payoff for A3 when S2 occurs is 5. The payoff for A2 when S2 occurs is 10. Therefore, the opportunity loss for A3 when S2 occurs is 10 - 5 = 5.

Instruction 17-2 the Following Payoff Table Shows Profits Associated with a Set

Instruction 17-2
the Following Payoff Table Shows Profits Associated with a Set