Decision trees show the profit outcomes for the plans for two doughnut stores in two different locations in a strong and a weak economy for the future. If the investor interested in building a store is optimistic, in which location should she build?
A) She should build Store 1, because it has a lower minimum profit.
B) She should build Store 2, because it has a greater maximum profit.
C) She should build Store 1, because it has a greater maximum profit.
D) She should build Store 2, because it has a greater minimum profit.

Question

Decision trees show the profit outcomes for the plans for two doughnut stores in two different locations in a strong and a weak economy for the future. If the investor interested in building a store is optimistic, in which location should she build? 
A) She should build Store 1, because it has a lower minimum profit. 
B) She should build Store 2, because it has a greater maximum profit. 
C) She should build Store 1, because it has a greater maximum profit. 
D) She should build Store 2, because it has a greater minimum profit.

Quizplus · Accepted Answer

C) An optimistic investor looks to use a maximax strategy. In this case, the store with greater upside corresponds to a maximax strategy. Store 1 has the greatest possible profit of $40,000, so it is the choice for an optimistic investor.

Decision Trees Show the Profit Outcomes for the Plans for Two