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 A2 when S1 occurs is
A)14.
B)0.
C)5.
D)-2.

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 A2 when S1 occurs is
A)14.
B)0.
C)5.
D)-2.

Quizplus · Accepted Answer

The opportunity loss for A2 when S1 occurs is calculated by finding the difference between the maximum payoff for S1 and the payoff for A2 under S1. The maximum payoff for S1 is 12 (from A1), and the payoff for A2 under S1 is -2. Thus, the opportunity loss is 12 - (-2) = 14.

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