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2 Decision Making Economic - Pearson

Ood fortune has come your way. After several weeks of interviewing,you have received job offers from three firms. The offers differ greatly,which leaves you quite confused. You have made this list of the national firm, $12 per hour starting wage, life insurance anddental benefits paid by the company, a two-week paid vacationeach year, and potential for rapid local firm, $20 per hour starting wage, life insurance anddental benefits available but you must pay the premiums, a two-week paid vacation each year, share options and pension planbenefits, and potential for firm, $15 per hour starting wage, full life insurance anddental benefits, one-week paid vacation, good pension plan, andmoderate advancement you consider the short run or the long run for this Decision ? Whichoffer provides you with the most today and which one the most overthe next five years?

Decision makers want the reward or benefit from a decision to be greater than the sacrifice or cost required to attain it (see Exhibit 2–1). Examining the relation-ship between rewards and sacrifices is known as cost/benefit analysis. In a condi-tion of absolute certainty, in which the outcome of a decision is known without

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