Determine whether each of the following statements is true, false, or uncertain. Explain your answers. A decision maker seldom knows the actual value of a forgone alternative and must base decisions on expected values.

Question

Lisa

Engineering

30 August, 13:29

Determine whether each of the following statements is true, false, or uncertain. Explain your answers. A decision maker seldom knows the actual value of a forgone alternative and must base decisions on expected values.

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Answers (1)

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Melina Quinn · Answer 1

a) FALSE: the opportunity cost of an activity is the total value of all of the alternatives passed up

b) FALSE: OC is a subjective measure of cost - only the individual can estimate the expected costs/benefits himself

c) FALSE: Info is only gathered if the expected benefits from gatherings info exceeds the costs of getting the expected costs - people normally make choices based on limited and incorrect info because of convenience

d) TRUE: you can guess you will enjoy a movie and then find it too violent for your tastes

Explanation:

Opportunity cost is commonly known as the alternative option to a particular activity. It is necessary to collect as many vital information as possible. It is important to collect information for business purpose and personal reasons. A movie can be interesting and at the same time, contains horror violent scenes.