The branches on a decision tree
A) illustrate possible combinations of fixed and variable costs.
B) are a convenient way to illustrate the results of a sensitivity analysis.
C) show possible project break-even points.
D) show possible management decisions and possible uncertain consequences.

Question

Quizplus · Accepted Answer

Decision trees are a graphical representation of decision-making situations and help to identify possible management decisions (such as choosing between different strategic options) and the uncertain consequences associated with each decision. The branches on a decision tree illustrate these possible outcomes and help decision-makers to weigh the risks and benefits of each possible decision. Options A, B, and C are not accurate descriptions of the branches on a decision tree.

The Branches on a Decision Tree