Use the following to answer the question(s) below.
Sunny Side Condominiums recently purchased land outside of Toronto and is trying to decide the size complex it should build (large or small). The following payoff table (in thousands of dollars) considers three possible levels of demand.
-Using the maximax approach, Sunny Side should
A) build a small complex with medium demand.
B) build a large complex.
C) build a small complex with high demand.
D) build a small complex with low demand.
E) build a large complex if demand is high.

Question

Use the following to answer the question(s) below.
Sunny Side Condominiums recently purchased land outside of Toronto and is trying to decide the size complex it should build (large or small). The following payoff table (in thousands of dollars) considers three possible levels of demand. 
-Using the maximax approach, Sunny Side should
A) build a small complex with medium demand. 
B) build a large complex. 
C) build a small complex with high demand. 
D) build a small complex with low demand. 
E) build a large complex if demand is high.

Quizplus · Accepted Answer

The maximax approach involves selecting the option with the highest possible payoff. Looking at the table, the highest payoffs occur when demand is high, regardless of the size of the complex. Therefore, Sunny Side should build a large complex to maximize its payoff in the event of high demand.

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