Quiz
Chapter 17
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Questions in this quiz (12)
1The expected value of an uncertain outcome is:
- AThe sum of the probabilities and random variables
- BThe product of the probabilities plus random variables
- CThe product of the probabilities and random variables
- DThe sum of the probabilities times the random variables
2If your uncle offers you a deal with an expected value much greater than your cost to take part:
- AYour uncle may have undervalued the likelihood of the deal going bad
- BYour uncle may have underestimated the value of the project in the worst case scenario
- CYour uncle may have overvalued the likelihood of the deal being successful
- DAll of the above
3You have to choose between risky options A and B. You calculate the expected value of A is greater than the expected value of B by 0.013%. Your likely course of action is:
- AChoose A because it is obviously higher
- BChoose B because it is obviously higher
- CFlip a coin because it is unlikely your probability estimates are this precise
- DChoose neither you are stumped
4You have to decide whether to sell widgets for $5 or $6 when your marginal cost is $3. In the past, you have had 15% success making the sale at the $5 price and only 10% success at the $6 price:
- AThe $5 price yields higher profits
- BBoth prices earn the same profits
- CThe $6 price yields higher profits
- DNeither price earns profits
5You have to decide whether to sell widgets for $5 or $6 when your marginal cost is $3. In the past, you have had 15% success making the sale at the $5 price and only 10% success at the $6 price. You might increase your profits by:
- ASetting a $6 price but offering a $1 discounts if customers begin to break off negotiations.
- BListing a price of widgets at $5 but tacking on a $1 premium if customers agree quickly.
- CRandomly alternating between the $5 and $6 prices.
- DSetting a $7 price and offering a $1 discount to all customers.
6Selection bias occurs:
- ABecause there are systematic differences between the treatment group and the control group that also affect the outcome.
- BBecause there are random differences between the treatment group and the control group that also affect the outcome.
- CIn randomized controlled experiments.
- DLess often in analyses of observational data than in experiments.
7Randomized experiments represent the "gold standard" in data analytics because:
- ASystematic differences between treatment and control groups generate selection bias.
- BSelection bias is eliminated since there are no systematic differences between treatment and control groups.
- CAnalyses with observational data are worse because they are always biased.
- DData scientists want to be considered as legitimate as laboratory scientists.
8The key determinant of a careful observational study is:
- AThe treatment group is created after the fact to be similar to a predetermined the control group.
- BThere are still some unexpected differences between the treatment group and the control group that generate selection bias.
- CThe control group is created to mimic the treatment group without systematic differences.
- DControl groups are determined by some factor that also can affect the outcome.
9If your analysis leads you to reject a hypothesis that is actually correct:
- AYou are committing at Type II error.
- BYou are responding to a false positive
- CYou are committing a Type I error.
- DYou are not observing a false positive.
10A manager will decide to fund too few projects with uncertain outcomes if:
- AProject failures are readily known to the manager's supervisor.
- BPassed on opportunities never get exposed.
- CManager reviews do not include evaluations projects that were passed over.
- DAll of the above.
11The difference between risk and uncertainty is:
- AUncertainty can be modeled with probabilities and statistics.
- BRisk refers to the state of the world that are completely unforeseen.
- CRisks are accurately calculated even when we cannot estimate some important outcomes.
- DNone of the above.
12A way to deal with uncertainty is:
- AGive a large probability to states you have not listed.
- BKeep plans rigid to gather information about outcomes that were unforeseen.
- CBecause contingencies can occur that had not been anticipated, one should add enough flexibility into your strategy that permits responding as they emerge.
- DNone of the above.
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- Fianl Exam Econ Quiz on Chapter 17, created by Randy Moeller on 22/07/2018.
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- Randy Moeller
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- English
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