List of top Decision Making Questions

Mrs. Sharma has a house which she wants to convert to a hostel and rent it out to students of a nearby women’s college. The house is a two story building and each door has eight rooms. When one looks from the outside, three rooms are found facing North, three found facing East, three found facing West and three found facing South. Expecting a certain number of students, Mrs. Sharma wanted to follow certain rules while giving the sixteen rooms on rent: 
All sixteen rooms must be occupied.
No room can be occupied by more than three students.
Six rooms facing north is called north wing. Similarly six rooms facing east, west and south are called as east wing, west wing and south wing. Each corner room would be in more than one wing. Each of the wings must have exactly 11 students. The rst oor must have twice as many students as the ground oor.
However Mrs. Sharma found that three fewer students have come to rent the rooms. Still. Mrs.Sharma could manage to allocate the rooms according to the rules

Some environmentalists, tired of waiting for ‘green economics’ to catch up with society at large, have adopted their own strategies for tipping the financial calculation in favour of the land. In the forest surrounding Vancouver, where trees are being felled for paper to print philosophy books, groups have used metal spikes hidden in trees to prevent chainsaws from operating safely, pushing up the cost of harvesting trees. In Phoenix, Arizona, where mountain nature reserves have been encroached on by new houses, hooded vigilantes have burnt down the new residences. The arsonists, according to the local paper, pray before they burn down a house that no one will get hurt, thinking primarily of the firefighters; the new houses are burned while still empty. “We don’t pray for ourselves not to get caught – that’s God’s will,” one is quoted as saying.
As per the activists, all aforementioned activities seem clearly very principled. But is it ethical?
Dr. Puneet worried about the test results of his patient, Ms. Benita. Ms. Benita was an old rich widow with no dependents. The results indicate that Ms. Benita has the potentially fatal Lymphangioleiomyomatosis (LAM) disease. LAM is rare and difficult to diagnose. People with LAM often need oxygen and lung transplants as the disease continues its course. According to the test results, Ms. Benita might have got it.
Dr. Puneet explained the situation to Ms. Benita carefully. Without naming the disease, he explained that the disease was progressive and would need treatment using drugs which were still at the experimental stage. Even then, the chance of success was not too bright. If the treatment was unsuccessful, then they would have to get ready for a lung transplant. The lung transplant itself was a risky course of treatment. Even if successful, she would require constant medical support and treatment.
Ms. Benita looked blank. She asks Dr. Puneet for his advice about the course of action. He nods gravely, “I’m afraid, Ms. Benita, I think there is only one course we can take.”
What should be Dr. Puneet’s advice?

Answer questions based on the following information: 

An automobile company's annual sales of its small cars depends on the state of the economy as well as on whether the company uses some high profile individual as its brand ambassador in advertisements of its product. The state of the economy is "good", "okay" and "bad" with probabilities 0.3, 0.4 and 0.3 respectively. The company may choose a high profile individual as its brand ambassador in TV ads or may go for the TV ads without a high profile brand ambassador.

If the company fixes price at Rs. 3.5 lakh, the annual sales of its small cars for different states of the economy and for different kinds of TV ads are summarized in Table 1. The figures in the first row are annual sales of the small cars when the company uses a high profile individual as its brand ambassador in its TV ads and the ones in the second row are that when the company does not use any brand ambassador in TV ads, for different states of the economy.

 

 GoodOkayBad
With brand ambassador1000008000050000
Without brand ambassador800005000030000


Table 1

Without knowing what exactly will be the state of the company in the coming one year, the company will either have to sign a TV ad contract with some high profile individual, who will be the company's brand ambassador for its small car for the next one year, or go for a TV ad without featuring any high profile individual. It incurs a cost of Rs. 3.45 lakh (excluding the payment to the brand ambassador) to put a car on the road.

When the company's profit is uncertain, the company makes decisions on the basis of its expected profit. If the company can earn a profit xi with probability pi (the probability depends on the state of economy), then the expected profit of the company is:

∑ (xi × pi)
 

Read the following case and choose the best alternative.

Ranjan Tuglák, the youngest cabinet minister of the newly elected coalition, glanced through the notes prepared by his secretary regarding the recent controversies on racket, the most popular game of the country. While International Racket Association (IRC) has agreed to implement Drug Testing Code (DTC) promoted by World Athletic and Gamer Federation, Racket Club which controls the entire racket related activities (unlike any other sports and games of the country) had some reservations regarding the initiative. Majority of the citizens waited for the international competitions eagerly and were fanatical about their country’s participation in them. As a result of the popularity of the game, 70% of the total revenue associated with the game originates from the country. Hence Racket Club has high bargaining power with IRC and can change any decision that is not aligned with its interests. Three most popular and senior players, including the captain, are against the application of DTC citing security reasons. A decision against the interests of these players may result in law and order problems throughout the country. Other players support the decision of their senior colleagues and if Racket Club refuses to agree, players may support Counter Racket Club, a new national level initiative. Counter Racket Club may threaten the monopoly of Racket Club, if it succeeds to attract some popular racket players.

Ranjan’s father had been forced to resign from politics due to alleged corruption charges. Ranjan had completed his entire education from abroad before returning to join politics. He is a great soccer player and has major reservations against racket. According to him, racket has negative influence on the country’s youth and diverts their attention from productive work. He also considers drug testing as an essential feature for any sports and games across the world. As the new cabinet minister for Youth and Sports he needs to take some important decisions on this controversial issue.
Read the following case and choose the best alternative – Guruji's guidance

Bhola, an avid nature lover, wanted to be an entrepreneur. He dreamt of establishing a chain of huts in Chaptur region to cater to tourists, who came attracted by the beauty and splendour of the Himalayas.

However, he was appalled by current degradation of the Himalayan environment. He remembered the early times when everything was so green, clean and peaceful. Now, greenery was replaced by buildings, peace was shattered by honking of vehicles and flocking of tourists, and cleanliness was replaced by heaps of plastics.

Bhola had a strong sense of right and wrong. On speaking to few locals about the issue, he realized that the locals were aware of these issues. However, they pointed out the benefits of development: pucca houses for locals; higher disposable income and with that, ability to send their children to better schools and colleges, better road connectivity, and access to latest technology in agriculture. Most locals wanted the development to continue.

Saddened by the lack of support from the locals, Bhola took up the issue with the government. He met the chief minister of the state to find out if government could regulate the developmental activities to prevent environmental degradation. However, the chief minister told Bhola that such an action would slow down the economic progress. That also meant loss of substantial tax revenues for the government.

Bhola needed to resolve the dilemma. Bhola always wanted to be an entrepreneur, who could contribute to the society and earn money as well. However, his business would also be responsible for destroying environment. If he did not set up his business, he would not be able to earn money and contribute to the society.

After mulling over the issues, he went to his mentor “Guruji”. Guruji realized that it was really a difficult puzzle: if one saves the environment, there seems to be no development and if the people and the government sought development, the environment and hence future of this planet and human beings was at stake. After careful thought, he felt that the dilemma could be resolved. He fixed up a meeting with Bhola to answer Bhola's queries.

Caselet (Questions 101-104): Shekhar, an MBA from Singapore, returned to his hometown of Jamshedpur. Jamshedpur had a population of 10 lacs and one of the highest per capita incomes among Indian cities. Shekhar loved music. While listening to his favourite song on satellite radio one day, he wondered if he could combine his passion with a business. A few weeks later, by coincidence, Music World called for expressions of interest from potential franchisees. Jamshedpur did not have a single good music store where residents could buy quality, variety, and the latest releases.

Music World wanted its franchisees to own at least 1200 square feet of space and invest Rs. 30 lacs. Profits were to be split in the ratio of 3:7 between Music World and the franchisee. Shekhar liked the idea of working with a well-known brand, but he worried whether Rs. 30 lacs was too much money to put in. He did not have the full amount and was thinking of borrowing from a bank. He checked with other Music World franchisees in towns like Patna and Ranchi, expecting similar footfall in Jamshedpur. A franchisee in Patna reported monthly sales revenue of Rs. 1 to 2 lacs, with a profit margin of 25 to 30 percent. Satisfied with this, Shekhar decided to go ahead.

He then began looking for space. Jamshedpur had three main areas: Bistupur, Sakchi, and Sonari, all connected by good roads. Bistupur was a business area with most of the high-end retail stores, shopped at by the upper-middle and higher classes, and was also the city's education hub. Sakchi was a growing lower-middle-class business area, while Sonari was mostly residential.

Shekhar preferred Bistupur, since it was where he did his own shopping. But he ran into problems there: space was hard to find, and rentals had touched Rs. 30 to 40 per square foot per month, compared to Rs. 15 to 20 per square foot per month in Sakchi and Sonari. A friend who lived in Sakchi told him that several branded outlets were opening up there, and that it looked like the fastest-growing market in Jamshedpur with the highest share of teenagers. Still, Shekhar was against Sakchi because of its "downmarket" image. He wanted to target the college-going crowd, and he expected to find them in Bistupur.

The high real-estate cost in Bistupur, set against his low opinion of the Sakchi market, left Shekhar confused. To think the decision through properly, he decided to drive down the Jamshedpur-Ranchi highway in his newly bought car.

Question: Which one of the following is the most important decision criterion in such a business situation?

Caselet (Questions 101-104): Shekhar, an MBA from Singapore, returned to his hometown of Jamshedpur. Jamshedpur had a population of 10 lacs and one of the highest per capita incomes among Indian cities. Shekhar loved music. While listening to his favourite song on satellite radio one day, he wondered if he could combine his passion with a business. A few weeks later, by coincidence, Music World called for expressions of interest from potential franchisees. Jamshedpur did not have a single good music store where residents could buy quality, variety, and the latest releases.

Music World wanted its franchisees to own at least 1200 square feet of space and invest Rs. 30 lacs. Profits were to be split in the ratio of 3:7 between Music World and the franchisee. Shekhar liked the idea of working with a well-known brand, but he worried whether Rs. 30 lacs was too much money to put in. He did not have the full amount and was thinking of borrowing from a bank. He checked with other Music World franchisees in towns like Patna and Ranchi, expecting similar footfall in Jamshedpur. A franchisee in Patna reported monthly sales revenue of Rs. 1 to 2 lacs, with a profit margin of 25 to 30 percent. Satisfied with this, Shekhar decided to go ahead.

He then began looking for space. Jamshedpur had three main areas: Bistupur, Sakchi, and Sonari, all connected by good roads. Bistupur was a business area with most of the high-end retail stores, shopped at by the upper-middle and higher classes, and was also the city's education hub. Sakchi was a growing lower-middle-class business area, while Sonari was mostly residential.

Shekhar preferred Bistupur, since it was where he did his own shopping. But he ran into problems there: space was hard to find, and rentals had touched Rs. 30 to 40 per square foot per month, compared to Rs. 15 to 20 per square foot per month in Sakchi and Sonari. A friend who lived in Sakchi told him that several branded outlets were opening up there, and that it looked like the fastest-growing market in Jamshedpur with the highest share of teenagers. Still, Shekhar was against Sakchi because of its "downmarket" image. He wanted to target the college-going crowd, and he expected to find them in Bistupur.

The high real-estate cost in Bistupur, set against his low opinion of the Sakchi market, left Shekhar confused. To think the decision through properly, he decided to drive down the Jamshedpur-Ranchi highway in his newly bought car.

Question: What could be the most likely reason for Shekhar's bias in favour of Bistupur?

Caselet (Questions 101-104): Shekhar, an MBA from Singapore, returned to his hometown of Jamshedpur. Jamshedpur had a population of 10 lacs and one of the highest per capita incomes among Indian cities. Shekhar loved music. While listening to his favourite song on satellite radio one day, he wondered if he could combine his passion with a business. A few weeks later, by coincidence, Music World called for expressions of interest from potential franchisees. Jamshedpur did not have a single good music store where residents could buy quality, variety, and the latest releases.

Music World wanted its franchisees to own at least 1200 square feet of space and invest Rs. 30 lacs. Profits were to be split in the ratio of 3:7 between Music World and the franchisee. Shekhar liked the idea of working with a well-known brand, but he worried whether Rs. 30 lacs was too much money to put in. He did not have the full amount and was thinking of borrowing from a bank. He checked with other Music World franchisees in towns like Patna and Ranchi, expecting similar footfall in Jamshedpur. A franchisee in Patna reported monthly sales revenue of Rs. 1 to 2 lacs, with a profit margin of 25 to 30 percent. Satisfied with this, Shekhar decided to go ahead.

He then began looking for space. Jamshedpur had three main areas: Bistupur, Sakchi, and Sonari, all connected by good roads. Bistupur was a business area with most of the high-end retail stores, shopped at by the upper-middle and higher classes, and was also the city's education hub. Sakchi was a growing lower-middle-class business area, while Sonari was mostly residential.

Shekhar preferred Bistupur, since it was where he did his own shopping. But he ran into problems there: space was hard to find, and rentals had touched Rs. 30 to 40 per square foot per month, compared to Rs. 15 to 20 per square foot per month in Sakchi and Sonari. A friend who lived in Sakchi told him that several branded outlets were opening up there, and that it looked like the fastest-growing market in Jamshedpur with the highest share of teenagers. Still, Shekhar was against Sakchi because of its "downmarket" image. He wanted to target the college-going crowd, and he expected to find them in Bistupur.

The high real-estate cost in Bistupur, set against his low opinion of the Sakchi market, left Shekhar confused. To think the decision through properly, he decided to drive down the Jamshedpur-Ranchi highway in his newly bought car.

Question: How best should Shekhar resolve his confusion?

Caselet (Questions 97-100): Om Chowdhury was one of the supervisors in the Fire and Safety (F&S) department of Maqsood Textile Mills. He was a distant cousin of Mr. Bhiwani, the General Manager (Personnel & Administration), and the Personnel and Administration department handled all personnel-related decisions. It was often rumored that Om had gotten the job because of his cousin's influence. Om, however, was careful in his work and never gave anyone a reason to complain. He was known to be a quiet man who kept to himself and his duties.

All F&S supervisors reported to Mr. Rabindra, the shop-floor manager. The mill ran on a three-shift basis, and Rabindra allotted supervisors to the different shifts. Supervisors had to stay present through the whole shift and run scheduled checks on the machinery and firefighting equipment. For some reason, Rabindra kept assigning Om to the night shift more often than the other supervisors. Om never objected to this, while the other supervisors often pleaded with Rabindra to be given day shifts instead. Staying awake and alert through the night shift was one of the hardest parts of the job.

After a while, Rabindra noticed that Om seemed indifferent to his work. Twice he found Om missing from his cabin, and others told him Om had been seen wandering different parts of the shop floor. Rabindra called Om in and reminded him of his responsibilities. Om did not argue and promised not to be careless again. Rabindra also raised the matter with Mr. Bhiwani, who called Om in for a personal talk and reminded him that their family tie made the situation awkward for everyone. Om agreed to improve, and soon he became a model supervisor, even going out of his way to help employees with their problems.

Three months later, Rabindra visited the plant at night and, looking into the F&S office, found Om playing solitaire on the office computer. Rabindra fired Om on the spot.

The next morning, Mr. Bhiwani called Rabindra and asked how he could fire an employee like that, and suggested he reconsider the dismissal. Rabindra replied, "This decision has already been made. There will be no turning back."

Question: The details of the entire episode have become common knowledge among all the employees of the company. Out of the options below, which one presents the best way for the top management to resolve the issue so as to benefit the organization as a whole?

Caselet (Questions 97-100): Om Chowdhury was one of the supervisors in the Fire and Safety (F&S) department of Maqsood Textile Mills. He was a distant cousin of Mr. Bhiwani, the General Manager (Personnel & Administration), and the Personnel and Administration department handled all personnel-related decisions. It was often rumored that Om had gotten the job because of his cousin's influence. Om, however, was careful in his work and never gave anyone a reason to complain. He was known to be a quiet man who kept to himself and his duties.

All F&S supervisors reported to Mr. Rabindra, the shop-floor manager. The mill ran on a three-shift basis, and Rabindra allotted supervisors to the different shifts. Supervisors had to stay present through the whole shift and run scheduled checks on the machinery and firefighting equipment. For some reason, Rabindra kept assigning Om to the night shift more often than the other supervisors. Om never objected to this, while the other supervisors often pleaded with Rabindra to be given day shifts instead. Staying awake and alert through the night shift was one of the hardest parts of the job.

After a while, Rabindra noticed that Om seemed indifferent to his work. Twice he found Om missing from his cabin, and others told him Om had been seen wandering different parts of the shop floor. Rabindra called Om in and reminded him of his responsibilities. Om did not argue and promised not to be careless again. Rabindra also raised the matter with Mr. Bhiwani, who called Om in for a personal talk and reminded him that their family tie made the situation awkward for everyone. Om agreed to improve, and soon he became a model supervisor, even going out of his way to help employees with their problems.

Three months later, Rabindra visited the plant at night and, looking into the F&S office, found Om playing solitaire on the office computer. Rabindra fired Om on the spot.

The next morning, Mr. Bhiwani called Rabindra and asked how he could fire an employee like that, and suggested he reconsider the dismissal. Rabindra replied, "This decision has already been made. There will be no turning back."

Question: Out of the options below, which one best sums up the learning from the solitaire incident?

Caselet (Questions 97-100): Om Chowdhury was one of the supervisors in the Fire and Safety (F&S) department of Maqsood Textile Mills. He was a distant cousin of Mr. Bhiwani, the General Manager (Personnel & Administration), and the Personnel and Administration department handled all personnel-related decisions. It was often rumored that Om had gotten the job because of his cousin's influence. Om, however, was careful in his work and never gave anyone a reason to complain. He was known to be a quiet man who kept to himself and his duties.

All F&S supervisors reported to Mr. Rabindra, the shop-floor manager. The mill ran on a three-shift basis, and Rabindra allotted supervisors to the different shifts. Supervisors had to stay present through the whole shift and run scheduled checks on the machinery and firefighting equipment. For some reason, Rabindra kept assigning Om to the night shift more often than the other supervisors. Om never objected to this, while the other supervisors often pleaded with Rabindra to be given day shifts instead. Staying awake and alert through the night shift was one of the hardest parts of the job.

After a while, Rabindra noticed that Om seemed indifferent to his work. Twice he found Om missing from his cabin, and others told him Om had been seen wandering different parts of the shop floor. Rabindra called Om in and reminded him of his responsibilities. Om did not argue and promised not to be careless again. Rabindra also raised the matter with Mr. Bhiwani, who called Om in for a personal talk and reminded him that their family tie made the situation awkward for everyone. Om agreed to improve, and soon he became a model supervisor, even going out of his way to help employees with their problems.

Three months later, Rabindra visited the plant at night and, looking into the F&S office, found Om playing solitaire on the office computer. Rabindra fired Om on the spot.

The next morning, Mr. Bhiwani called Rabindra and asked how he could fire an employee like that, and suggested he reconsider the dismissal. Rabindra replied, "This decision has already been made. There will be no turning back."

Question: Of the options below, which could have been a better response from Mr. Rabindra when he saw Om playing solitaire?

Caselet (Questions 101-104): Shekhar, an MBA from Singapore, returned to his hometown of Jamshedpur. Jamshedpur had a population of 10 lacs and one of the highest per capita incomes among Indian cities. Shekhar loved music. While listening to his favourite song on satellite radio one day, he wondered if he could combine his passion with a business. A few weeks later, by coincidence, Music World called for expressions of interest from potential franchisees. Jamshedpur did not have a single good music store where residents could buy quality, variety, and the latest releases.

Music World wanted its franchisees to own at least 1200 square feet of space and invest Rs. 30 lacs. Profits were to be split in the ratio of 3:7 between Music World and the franchisee. Shekhar liked the idea of working with a well-known brand, but he worried whether Rs. 30 lacs was too much money to put in. He did not have the full amount and was thinking of borrowing from a bank. He checked with other Music World franchisees in towns like Patna and Ranchi, expecting similar footfall in Jamshedpur. A franchisee in Patna reported monthly sales revenue of Rs. 1 to 2 lacs, with a profit margin of 25 to 30 percent. Satisfied with this, Shekhar decided to go ahead.

He then began looking for space. Jamshedpur had three main areas: Bistupur, Sakchi, and Sonari, all connected by good roads. Bistupur was a business area with most of the high-end retail stores, shopped at by the upper-middle and higher classes, and was also the city's education hub. Sakchi was a growing lower-middle-class business area, while Sonari was mostly residential.

Shekhar preferred Bistupur, since it was where he did his own shopping. But he ran into problems there: space was hard to find, and rentals had touched Rs. 30 to 40 per square foot per month, compared to Rs. 15 to 20 per square foot per month in Sakchi and Sonari. A friend who lived in Sakchi told him that several branded outlets were opening up there, and that it looked like the fastest-growing market in Jamshedpur with the highest share of teenagers. Still, Shekhar was against Sakchi because of its "downmarket" image. He wanted to target the college-going crowd, and he expected to find them in Bistupur.

The high real-estate cost in Bistupur, set against his low opinion of the Sakchi market, left Shekhar confused. To think the decision through properly, he decided to drive down the Jamshedpur-Ranchi highway in his newly bought car.

Question: Suppose sales in Patna and Bistupur are likely to be the same, how many years would it take for Shekhar to recoup the investment (consider zero inflation)?

The jars A to D are of equal radius. The option which gives the correct relationship among the capacity of jars is:

Caselet (Questions 97-100): Om Chowdhury was one of the supervisors in the Fire and Safety (F&S) department of Maqsood Textile Mills. He was a distant cousin of Mr. Bhiwani, the General Manager (Personnel & Administration), and the Personnel and Administration department handled all personnel-related decisions. It was often rumored that Om had gotten the job because of his cousin's influence. Om, however, was careful in his work and never gave anyone a reason to complain. He was known to be a quiet man who kept to himself and his duties.

All F&S supervisors reported to Mr. Rabindra, the shop-floor manager. The mill ran on a three-shift basis, and Rabindra allotted supervisors to the different shifts. Supervisors had to stay present through the whole shift and run scheduled checks on the machinery and firefighting equipment. For some reason, Rabindra kept assigning Om to the night shift more often than the other supervisors. Om never objected to this, while the other supervisors often pleaded with Rabindra to be given day shifts instead. Staying awake and alert through the night shift was one of the hardest parts of the job.

After a while, Rabindra noticed that Om seemed indifferent to his work. Twice he found Om missing from his cabin, and others told him Om had been seen wandering different parts of the shop floor. Rabindra called Om in and reminded him of his responsibilities. Om did not argue and promised not to be careless again. Rabindra also raised the matter with Mr. Bhiwani, who called Om in for a personal talk and reminded him that their family tie made the situation awkward for everyone. Om agreed to improve, and soon he became a model supervisor, even going out of his way to help employees with their problems.

Three months later, Rabindra visited the plant at night and, looking into the F&S office, found Om playing solitaire on the office computer. Rabindra fired Om on the spot.

The next morning, Mr. Bhiwani called Rabindra and asked how he could fire an employee like that, and suggested he reconsider the dismissal. Rabindra replied, "This decision has already been made. There will be no turning back."

Question: The options below give combinations of a possible root cause of the problem and its justification. Given the details in the case, which one can be inferred to be the best option?

Children are in pursuit of a dog whose leash has broken. Krishnarajan is directly behind the dog. Rangarajan is behind Krishnarajan. Natrajan is behind Rangarajan. Premrajan is ahead of the dog walking down the street in the opposite direction. As the children and dog pass, Premrajan turns around and joins the pursuit. He runs in behind Rangarajan. Krishnarajan runs faster and is alongside the dog on the left. Rangarajan runs faster and is alongside the dog on the right. Which child is directly behind the dog?

Directions: A circular field, with inner radius of 10 meters and outer radius of 20 meters, was divided into five successive stages for ploughing. The ploughing of each stage was handed over to a different farmer.

1. Farmers are referred to by the symbols F1, F2, F3, F4, F5.
2. The points between different stages are referred to by the symbols P1, P2, P3, P4, P5, not necessarily in that order.
3. Farmer F5 was given the work of ploughing the stage starting at point P4.
4. The stage from point P5 to point P3 was not the first stage.
5. Farmer F4 was given the work of the fourth stage.
6. Stage 3 finished at point P1, and the work of which was not given to farmer F1.
7. Farmer F3 was given the work of the stage ending at point P5.

For which farmer was P2 a finishing point?

Directions: A circular field, with inner radius of 10 meters and outer radius of 20 meters, was divided into five successive stages for ploughing. The ploughing of each stage was handed over to a different farmer.

1. Farmers are referred to by the symbols F1, F2, F3, F4, F5.
2. The points between different stages are referred to by the symbols P1, P2, P3, P4, P5, not necessarily in that order.
3. Farmer F5 was given the work of ploughing the stage starting at point P4.
4. The stage from point P5 to point P3 was not the first stage.
5. Farmer F4 was given the work of the fourth stage.
6. Stage 3 finished at point P1, and the work of which was not given to farmer F1.
7. Farmer F3 was given the work of the stage ending at point P5.

Which was the starting point for farmer F3?

Directions: A circular field, with inner radius of 10 meters and outer radius of 20 meters, was divided into five successive stages for ploughing. The ploughing of each stage was handed over to a different farmer.

1. Farmers are referred to by the symbols F1, F2, F3, F4, F5.
2. The points between different stages are referred to by the symbols P1, P2, P3, P4, P5, not necessarily in that order.
3. Farmer F5 was given the work of ploughing the stage starting at point P4.
4. The stage from point P5 to point P3 was not the first stage.
5. Farmer F4 was given the work of the fourth stage.
6. Stage 3 finished at point P1, and the work of which was not given to farmer F1.
7. Farmer F3 was given the work of the stage ending at point P5.

Which were the starting and finishing points for stage 2?

Decisions are often 'risky' in the sense that their outcomes are not known with certainty. Presented with a choice between a risky prospect that offers a 50 percent chance to win $200 (otherwise nothing) and an alternative of receiving $100 for sure, most people prefer the sure gain over the gamble, although the two prospects have the same expected value. (Expected value is the sum of possible outcomes weighted by their probability of occurrence.) Preference for a sure outcome over a risky prospect of equal expected value is called risk averse; indeed, people tend to be risk averse when choosing between prospects with positive outcomes. The tendency towards risk aversion can be explained by the notion of diminishing sensitivity, first formalized by Daniel Bernoulli in 1738. Just as the impact of a candle is greater when it is brought into a dark room than into a room that is well lit, so, suggested Bernoulli, the utility resulting from a small increase in wealth will be inversely proportional to the amount of wealth already in one's possession. It has since been assumed that people have a subjective utility function, and that preferences should be described using expected utility instead of expected value. According to expected utility, the worth of a gamble offering a 50 percent chance to win $200 (otherwise nothing) is \(0.50 \times u(200)\), where \(u\) is the person's concave utility function. (A function is concave or convex if a line joining two points on the curve lies entirely below or above the curve, respectively.) It follows from a concave function that the subjective value attached to a gain of $100 is more than 50 percent of the value attached to a gain of $200, which gives a preference for the sure $100 gain and, hence, risk aversion.

Consider now a choice between losses. When asked to choose between a prospect that offers a 50 percent chance to lose $200 (otherwise nothing) and the alternative of losing $100 for sure, most people prefer to take an even chance at losing $200 or nothing over a sure $100 loss. This is because diminishing sensitivity applies to negative as well as to positive outcomes: the impact of an initial $100 loss is greater than that of the next $100. This gives a convex function for losses and a preference for risky prospects over sure outcomes of equal expected value, called risk seeking. Except for prospects that involve very small probabilities, risk aversion is generally seen in choices involving gains, while risk seeking tends to hold in choices involving losses.

Based on the above passage, look at the decision situations faced by three persons: Babu, Babitha and Bablu.

Suppose the instant and further utility of each unit of gain is the same for Babu. Babu has decided to play as many times as possible before he dies. He expects to live for another 50 years. A game does not last more than ten seconds. Babu is confused about which theory to trust for making his decision and seeks the help of a renowned decision making consultant, Roy Associates. What should Roy Associates' advice to Babu be?
Decisions are often 'risky' in the sense that their outcomes are not known with certainty. Presented with a choice between a risky prospect that offers a 50 percent chance to win $200 (otherwise nothing) and an alternative of receiving $100 for sure, most people prefer the sure gain over the gamble, although the two prospects have the same expected value. Preference for a sure outcome over a risky prospect of equal expected value is called risk averse; people tend to be risk averse when choosing between prospects with positive outcomes, a pattern explained by diminishing sensitivity: the utility from a small increase in wealth falls as the wealth already held rises, so the person's utility function \(u\) is concave for gains. A convex utility function is the mirror image of this: it gives MORE weight to the extreme, spread-out outcome of a gamble than to a 'safer,' more sure-like outcome of the same expected value, and a person with such a function is called risk taking or risk seeking.

Based on the above, look at the decision situation faced by Babitha.

Babitha played a game in which she had three options, with probabilities 0.4, 0.5 and 0.8 respectively. The gains from the three outcomes are likely to be $100, $80 and $50 respectively. An expert has pointed out that Babitha is a risk taking person. According to the expected utility hypothesis, which option is Babitha most likely to favour?
Recall Babitha's game: three options with probabilities 0.4, 0.5 and 0.8, giving likely gains of $100, $80 and $50 respectively (all three have the same expected value of $40, and Babitha, being risk taking, was shown to favour the first, most spread-out option when she can play repeatedly).

Continuing with the previous question, suppose Babitha can only play one more game. Which theory would help in arriving at a better decision?
Decisions are often 'risky' in the sense that their outcomes are not known with certainty. Expected value is the sum of possible outcomes weighted by their probability of occurrence, and a preference between prospects can be judged purely on this basis under the expected value hypothesis, without reference to any personal utility function. Utility functions, and the concepts of concave (risk averse) or convex (risk seeking) curvature, belong to the SEPARATE expected utility hypothesis, not to expected value itself, which is just a plain, objective weighted sum.

Based on the above, look at the decision situation faced by Bablu.

Bablu had four options with probabilities of 0.1, 0.25, 0.5 and 1 respectively. The gains associated with each option are $1000, $400, $200 and $100 respectively. Bablu chose the first option. As per the expected value hypothesis:
This group of questions is based on a set of conditions. In answering some of the questions, it may help to draw a rough diagram. Choose the response that most accurately and completely answers each question.

A circular field, with an inner radius of 10 meters and an outer radius of 20 meters, was divided into five successive stages for ploughing. The ploughing of each stage was handed over to a different farmer.
1. Farmers are referred to by the following symbols: F1, F2, F3, F4, F5.
2. The points between different stages of the project are referred to by the following symbols: P1, P2, P3, P4, P5, not necessarily in that order.
3. Farmer F5 was given the work of ploughing the stage starting at point P4.
4. The stage from point P5 to point P3 was not the first stage.
5. Farmer F4 was given the work of the fourth stage.
6. Stage 3 finished at point P1, and the work of it was not given to farmer F1.
7. Farmer F3 was given the work of the stage ending at point P5.

Which was the finish point for farmer F2?
This group of questions is based on a set of conditions. In answering some of the questions, it may help to draw a rough diagram. Choose the response that most accurately and completely answers each question.

A circular field, with an inner radius of 10 meters and an outer radius of 20 meters, was divided into five successive stages for ploughing. The ploughing of each stage was handed over to a different farmer.
1. Farmers are referred to by the following symbols: F1, F2, F3, F4, F5.
2. The points between different stages of the project are referred to by the following symbols: P1, P2, P3, P4, P5, not necessarily in that order.
3. Farmer F5 was given the work of ploughing the stage starting at point P4.
4. The stage from point P5 to point P3 was not the first stage.
5. Farmer F4 was given the work of the fourth stage.
6. Stage 3 finished at point P1, and the work of it was not given to farmer F1.
7. Farmer F3 was given the work of the stage ending at point P5.

Which stage was ploughed by farmer F5?