Western Governors University (WGU) BUS3100 C723 Quantitative Analysis for Business Practice Exam

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Question: 1 / 20

Which of the following best describes 'decision under certainty'?

Decisions with unknown risks

Decisions where all risks and outcomes are well known

The concept of 'decision under certainty' refers to scenarios in which the decision-maker has complete knowledge of all possible outcomes and the associated probabilities. This means that every potential outcome is well defined, and the risks involved are fully understood. In such situations, the decision-maker can confidently choose the course of action that maximizes their objectives, knowing exactly what the consequences will be.

Having all risks and outcomes well known allows for logical and calculated choices, as there are no uncertainties to navigate. This is crucial in areas like strategic planning, financial forecasting, or risk assessment, where concrete data shapes the decision-making process.

In contrast, other situations described by the other options involve elements such as unknown risks or uncertainty in outcomes, which do not align with the definition of decision under certainty.

Decisions that yield varying outcomes based on inputs

Decisions made without any data

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