BUSOBA 2321 MIDTERM EXAMINATION
2026 QUESTIONS WITH SOLUTIONS
GRADED A+
⩥ 5 steps of the decision making process. Answer: 1) define problem
2) list all alternatives (options, rows)
3) identify outcomes (states of nature, columns) for each alternative
4) identify payoff for each combo of alternatives and outcome
5) pick a technique
⩥ profit =. Answer: revenue - cost
⩥ revenue =. Answer: Price x Quantity
⩥ costs =. Answer: fixed costs + (quantity x variable costs)
⩥ Profit line equation. Answer: (P-VC) x Q - FC
⩥ break even point graph. Answer: FC= intercept
(P-VC)= slope
x intercept = break even point
, ⩥ indifference point. Answer: when total costs are equal to profit
⩥ indifference point equation (with price). Answer: (Pa-VCa)Q-
FCa=(Pb-VCb)Q-FCb
⩥ indifference point equation (with costs only). Answer:
FCa+VCa*Q=FCb+VCb*Q
⩥ Steps to calculating indifference point. Answer: 1) Determine
Equations for each
2) Set each equation equal to each other and solve for Q
3) make indifference point table, set test points, plug back into equation
4) determine which points yield the highest profit
⩥ MAXIMAX. Answer: optimistic, choosing biggest return option
(rows), then max of these options
⩥ MAXMIN. Answer: pessimistic, choosing the smallest return option
(rows), then take the max of these options
⩥ MINIMAX Regret. Answer: 1) find best outcome for each state of
nature (column)
2) determine the regret for each combo
2026 QUESTIONS WITH SOLUTIONS
GRADED A+
⩥ 5 steps of the decision making process. Answer: 1) define problem
2) list all alternatives (options, rows)
3) identify outcomes (states of nature, columns) for each alternative
4) identify payoff for each combo of alternatives and outcome
5) pick a technique
⩥ profit =. Answer: revenue - cost
⩥ revenue =. Answer: Price x Quantity
⩥ costs =. Answer: fixed costs + (quantity x variable costs)
⩥ Profit line equation. Answer: (P-VC) x Q - FC
⩥ break even point graph. Answer: FC= intercept
(P-VC)= slope
x intercept = break even point
, ⩥ indifference point. Answer: when total costs are equal to profit
⩥ indifference point equation (with price). Answer: (Pa-VCa)Q-
FCa=(Pb-VCb)Q-FCb
⩥ indifference point equation (with costs only). Answer:
FCa+VCa*Q=FCb+VCb*Q
⩥ Steps to calculating indifference point. Answer: 1) Determine
Equations for each
2) Set each equation equal to each other and solve for Q
3) make indifference point table, set test points, plug back into equation
4) determine which points yield the highest profit
⩥ MAXIMAX. Answer: optimistic, choosing biggest return option
(rows), then max of these options
⩥ MAXMIN. Answer: pessimistic, choosing the smallest return option
(rows), then take the max of these options
⩥ MINIMAX Regret. Answer: 1) find best outcome for each state of
nature (column)
2) determine the regret for each combo
