South Western Federal Taxation 2010, Comprehensive Volume, 33th Edition - Chapter1

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CHAPTER 1
Introduction to Quantitative Analysis

TRUE/FALSE

1.1Interviews, statistical sampling, and company reports provide input data for quantitative analysis models.

ANSWER: TRUE {moderate, THE QUANTITATIVE ANALYSIS APPROACH}

1.2In the early 1900s, Henry Ford pioneered the principles of the scientific approach to management.

ANSWER: FALSE {moderate, WHAT IS QUANTITATIVE ANALYSIS?}

1.3Managers do not need to be familiar with the limitations, assumptions, and/ or specific applicability of the quantitative analysis technique to use it for accurate decision making.

ANSWER: FALSE {moderate, INTRODUCTION}

1.4During World War II, many new scientific and quantitative techniques were developed to assist the military, and these developments were so successful that many companies started using similar techniques in managerial decision making and planning after the war.

ANSWER: TRUE {moderate, WHAT IS QUANTITATIVE ANALYSIS?}

1.5When a problem is difficult to quantify, it may be necessary to develop unspecific objectives.

ANSWER: FALSE {moderate, THE QUANTITATIVE ANALYSIS APPROACH}

1.6The Quantitative Analysis Approach consists of six steps.

ANSWER: FALSE {moderate, THE QUANTITATIVE ANALYSIS APPROACH}

1.7A mathematical model shows the relationship between quantifiable and non-quantifiable information.

ANSWER: FALSE {moderate, THE QUANTITATIVE ANALYSIS APPROACH}

1.8Decision variables may also be called parameters.

ANSWER: FALSE {moderate, THE QUANTITATIVE ANALYSIS APPROACH}

1.9Model variables can be controllable or uncontrollable.

ANSWER: TRUE {moderate, THE QUANTITATIVE ANALYSIS APPROACH}

1.10A series of steps or procedures that are repeated is known as an algorithm.

ANSWER: TRUE {moderate, THE QUANTITATIVE ANALYSIS APPROACH}

1.11A model is a representation of a situation.

ANSWER: TRUE {moderate, THE QUANTITATIVE ANALYSIS APPROACH}

1.12 A parameter is a measurable quantity that may vary or is subject to change.

ANSWER: FALSE {moderate, THE QUANTITATIVE ANALYSIS APPROACH}

1.13 Trying various approaches and picking the one resulting in the best decision is called incomplete enumeration.

ANSWER: FALSE {moderate, THE QUANTITATIVE ANALYSIS APPROACH}

1.14All problems can be solved by considering only the quantitative issues.

ANSWER: FALSE {easy, WHAT IS QUANTITATIVE ANALYSIS?}

1.15A profit equation is an example of a schematic model.

ANSWER: FALSE {moderate, THE QUANTITATIVE ANALYSIS APPROACH}

1.16Testing the data and model should be done before the results have been analyzed.

ANSWER: TRUE {easy, THE QUANTITATIVE ANALYSIS APPROACH}

1.17Sensitivity analysis helps us estimate the effect of known and unknown errors in our model.

ANSWER: TRUE {moderate, THE QUANTITATIVE ANALYSIS APPROACH}

1.18Models can help us analyze a problem and sell a decision to those who must implement it.

ANSWER: TRUE {easy, HOW TO DEVELOP A QUANTITATIVE MODEL, AACSB: Communication}

1.19A sensitivity analysis allows a manager to answer the “what if” questions.

ANSWER: TRUE {moderate, THE QUANTITATIVE ANALYSIS APPROACH}

1.20One problem in using a quantitative model is that the necessary data may be unavailable.

ANSWER: TRUE {easy, POSSIBLE PROBLEMS IN THE QUANTITATIVE ANALYSIS APPROACH}

MULTIPLE CHOICE

1.21Which of the following are reasons that a quantitative analysis technique might fail to solve a problem?

(a) underestimating the total cost of developing the model b) defining specific and measurable...
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