Q1. Decision making is best defined as:
(a) The process of identifying alternatives and choosing the best course of action. (b) The act of gathering information without taking any action.
(c) The emotional response to a problem situation.
(d) The automatic reaction based on habit.
Answer: (a)
Explanation: Decision making involves identifying a problem, generating alternatives, evaluating them, and selecting the most appropriate option.
Q2. Which of the following is NOT a step in the rational decision‑making model?
(a) Define the problem
(b) Identify decision criteria (c) Rely on intuition alone
(d) Evaluate alternatives
Answer: (c)
Explanation: The rational model emphasizes systematic analysis; relying solely on intuition bypasses the analytical steps.
Q3. Bounded rationality, proposed by Herbert Simon, suggests that decision makers: (a) Always have perfect information
(b) Seek satisficing solutions rather than optimal ones
(c) Ignore all constraints
(d) Use only quantitative methods
Answer: (b)
Explanation: Because of limited information, time, and cognitive capacity, individuals choose alternatives that are “good enough” (satisficing).
Q4. In decision theory, a situation where the probabilities of outcomes are unknown is called: (a) Certainty
(b) Risk
(c) Uncertainty
(d) Ambiguity
Answer: (c)
Explanation: Under uncertainty, the decision maker cannot assign probabilities to possible outcomes.
Q5. Which technique helps a group reach consensus by anonymously collecting experts’ opinions over several rounds? (a) Brainstorming
(b) Nominal Group Technique
(c) Delphi Technique
(d) Fishbone Diagram
Answer: (c)
Explanation: The Delphi method uses iterative, anonymous questionnaires to converge expert judgment.
Q6. A decision tree is primarily used to:
(a) List all possible causes of a problem
(b) Visualize sequential decisions and their probabilistic outcomes
(c) Rank alternatives based on subjective preferences
(d) Calculate the mean of a data set
Answer: (b)
Explanation: Decision trees map out decisions, chance events, and payoffs in a graphical format to evaluate expected values.
Q7. The “anchoring bias” refers to:
(a) Overestimating the probability of rare events (b) Relying too heavily on the first piece of information encountered
(c) Preferring information that confirms existing beliefs
(d) Avoiding decisions that involve loss
Answer: (b)
Explanation: Anchoring occurs when initial information (the anchor) disproportionately influences subsequent judgments.
Q8. Which of the following is a characteristic of programmed decisions?
(a) They are novel and unstructured
(b) They require extensive judgment and analysis
(c) They are repetitive and follow established rules
(d) They involve high levels of uncertainty
Answer: (c)
Explanation: Programmed decisions are routine, often guided by policies or procedures.
Q9. In a payoff matrix, the term “dominant strategy” means:
(a) A strategy that yields the highest payoff regardless of opponents’ actions
(b) A strategy that is always the worst choice
(c) A strategy that depends on random chance
(d) A strategy used only in cooperative games
Answer: (a)
Explanation: A dominant strategy provides the best outcome for a player no matter what others do.
Q10. The concept of “opportunity cost” in decision making refers to:
(a) The monetary expense incurred for a chosen alternative
(b) The benefit foregone by not selecting the next best alternative
(c) The total cost of all alternatives considered
(d) The sunk cost already spent
Answer: (b)
Explanation: Opportunity cost is the value of the best alternative that is sacrificed when a decision is made.
Q11. Which bias leads decision makers to favor information that confirms their preexisting beliefs?
(a) Hindsight bias
(b) Availability heuristic
(c) Confirmation bias
(d) Loss aversion Answer: (c)
Explanation: Confirmation bias causes individuals to seek, interpret, and remember information that supports their existing views.
Q12. The “Nominal Group Technique” (NGT) is best described as:
(a) A method where participants verbally build on each other’s ideas without criticism
(b) A structured process where individuals generate ideas silently, then share and rank them
(c) A technique that relies solely on expert opinion without group interaction
(d) A random voting system to select alternatives
Answer: (b)
Explanation: NGT combines silent idea generation with round‑robin sharing and voting to reduce dominance by any single member.
Q13. In decision analysis, the Expected Monetary Value (EMV) of an alternative is calculated by:
(a) Multiplying each outcome’s payoff by its probability and summing the results
(b) Averaging the payoffs of all outcomes
(c) Selecting the maximum payoff irrespective of probability
(d) Adding the probabilities of all outcomes
Answer: (a)
Explanation: EMV = Σ (probability_i × payoff_i). It quantifies the average outcome if the decision were repeated many times.
Q14. Which of the following is NOT a typical symptom of groupthink?
(a) Illusion of invulnerability
(b) Self‑censorship (c) Encouragement of dissenting opinions
(d) Stereotyping of outsiders
Answer: (c)
Explanation: Groupthink suppresses dissent; encouraging opposing views mitigates groupthink.
Q15. A decision made under conditions of certainty implies that:
(a) The decision maker knows the exact outcome of each alternative
(b) Probabilities can be assigned to outcomes
(c) No information is available about outcomes
(d) The decision is based purely on intuition
Answer: (a) Explanation: Certainty means each alternative leads to a known, predictable result.
Q16. The “heuristic” known as the availability heuristic leads people to:
(a) Judge the likelihood of events based on how easily examples come to mind
(b) Always choose the option with the highest expected value
(c) Ignore all statistical data
(d) Prefer alternatives that involve less risk
Answer: (a)
Explanation: If an event is readily recalled (e.g., plane crashes after news coverage), it is perceived as more common.
Q17. Which decision‑making model emphasizes the role of intuition and experience, especially when time is limited?
(a) Rational model
(b) Bounded rationality model
(c) Recognition‑primed decision (RPD) model
(d) Classical economics model
Answer: (c)
Explanation: The RPD model, developed by Gary Klein, describes how experts recognize patterns and choose actions intuitively under pressure.
Q18. In a SWOT analysis, “Threats” refer to:
(a) Internal strengths that can be leveraged
(b) External factors that could hinder performance
(c) Resources that are currently underutilized
(d) Past successes that guarantee future results
Answer: (b)
Explanation: Threats are external challenges such as new regulations, competitors, or economic downturns.
Q19. The term “Pareto efficiency” in decision making means:
(a) An outcome where at least one person can be made better off without making anyone worse off
(b) An outcome where no one can be made better off without making someone else worse off
(c) A situation where all alternatives have equal payoff
(d) A decision that maximizes total utility regardless of distribution
Answer: (b)
Explanation: Pareto efficiency describes a state where resources are allocated such that any reallocation would harm at least one individual.
Q20. Which of the following best illustrates the “sunk cost fallacy”?
(a) Continuing a project because of past investments despite negative future prospects
(b) Abandoning a project as soon as any cost is incurred
(c) Choosing the cheapest option regardless of quality
(d) Investing in a new technology because it is trendy
Answer: (a)
Explanation: The sunk cost fallacy occurs when irreversible past costs influence current decisions, leading to irrational persistence.
Q21. In the context of forestry management, a decision to allocate a limited budget between fire prevention and reforestation primarily involves:
(a) Routine, programmed decision making
(b) Strategic, non‑programmed decision making under uncertainty
(c) Purely intuitive decision making
(d) Decision making based solely on historical averages
Answer: (b)
Explanation: Allocating scarce resources among competing objectives with uncertain outcomes is a strategic, non‑programmed decision.
Q22. Which technique helps to break down a complex decision into a hierarchy of goals, criteria, and alternatives for systematic evaluation?
(a) Decision tree
(b) Cost‑benefit analysis
(c) Analytic Hierarchy Process (AHP) (d) Brainstorming
Answer: (c)
Explanation: AHP structures decision problems into a hierarchy and uses pairwise comparisons to derive priority scores.
Q23. The “risk aversion” behavior of decision makers is best described by:
(a) Preferring a certain outcome over a gamble with higher expected value
(b) Always selecting the alternative with the highest variance
(c) Being indifferent between risk and certainty (d) Choosing the option with the maximum possible payoff regardless of probability
Answer: (a)
Explanation: Risk‑averse individuals value certainty and are willing to accept lower expected returns to avoid uncertainty.
Q24. Which of the following is an example of a “group decision support system” (GDSS)? (a) A single analyst using a spreadsheet to compute NPV
(b) A video conference where participants share ideas and vote via electronic polling
(c) A manager making a decision based on gut feeling alone
(d) A printed report distributed to employees for reading
Answer: (b)
Explanation: GDSS combines communication tools and software to facilitate collaborative decision making among group members.
Q25. In decision theory, the “maximin” criterion is used when a decision maker wants to:
(a) Maximize the best possible payoff
(b) Minimize the maximum possible loss
(c) Choose the alternative with the highest average payoff
(d) Select the option that minimizes regret
Answer: (b)
Explanation: Maximin (maximize the minimum payoff) is a conservative strategy aimed at guarding against the worst‑case outcome.
