Principles of Management, Leadership, and Decision-

Making MCQs for CAA ATC Exam

Management Fundamentals
1. Which of the following best describes management?
a. The process of planning, organizing, leading, and controlling resources to achieve goals effectively and
efficiently.
b. The act of completing all tasks personally to ensure they are done correctly.
c. The analysis of financial data for a company’s accounting records.
d. A system of producing goods with no human involvement.

Correct Answer: a

2. Which of these is NOT one of the basic functions of management?

a. Planning
b. Organizing
c. Marketing
d. Controlling

Correct Answer: c

3. In a management context, “doing things right” is a focus on ______, whereas “doing the right things” is
a focus on ______.
a. Efficiency; Effectiveness
b. Effectiveness; Efficiency
c. Strategy; Tactics
d. Management; Leadership

Correct Answer: a

4. According to Henry Mintzberg, which of the following is an interpersonal role of a manager?

a. Figurehead
b. Monitor
c. Negotiator
d. Disturbance handler

Correct Answer: a

5. Who is known as the “father of scientific management” for his contributions to improving industrial
efficiency?
a. Frederick W. Taylor
b. Henri Fayol
c. Elton Mayo
d. Peter Drucker

Correct Answer: a
6. Henri Fayol proposed 14 principles of management. Which of the following is NOT one of Fayol’s
principles?
a. Unity of command
b. Division of work
c. Time and motion study
d. Esprit de corps

Correct Answer: c

7. The Hawthorne studies (conducted by Elton Mayo) highlighted the importance of ______ in the workplace.
a. monetary incentives
b. job specialization
c. social and psychological factors
d. strict enforcement of rules

Correct Answer: c

8. According to Douglas McGregor, a manager who assumes that employees are lazy, dislike work, and must
be coerced to perform is following ____.
a. Theory X assumptions
b. Theory Y assumptions
c. Herzberg’s motivation factors
d. the Hawthorne effect

Correct Answer: a

9. Which management thinker introduced the concept of bureaucracy with a focus on a formal hierarchy and
impersonal rules?
a. Max Weber
b. F.W. Taylor
c. Abraham Maslow
d. Henri Fayol

Correct Answer: a

10. Management by Objectives (MBO), a process of joint goal-setting between managers and subordinates, is
most closely associated with:
a. Peter Drucker
b. Henry Mintzberg
c. Frederick Herzberg
d. W. Edwards Deming

Correct Answer: a
Planning
11. Which of the following is generally the first step in the planning process?
a. Setting objectives (defining goals)
b. Developing alternative courses of action
c. Implementing the plan
d. Evaluating and monitoring results

Correct Answer: a

12. In planning, making assumptions about future conditions (such as market trends or the economy) is known
as:
a. Developing premises
b. Setting performance standards
c. Implementing strategies
d. Formulating policies

Correct Answer: a

13. A plan that covers a period of five or more years and defines the long-term vision and goals of an
organization is a:
a. Strategic plan
b. Operational plan
c. Standing plan
d. Contingency plan

Correct Answer: a

14. Which of the following is an example of a single-use plan (used for a specific one-time project or event)?
a. A project or program plan
b. A policy
c. A procedure
d. A rule

Correct Answer: a

15. Policies, procedures, and rules that guide recurring situations in an organization are all examples of ____
plans.
a. Standing
b. Single-use
c. Tactical
d. Contingency

Correct Answer: a
 16. Management by Objectives (MBO) can best be described as:
a. A process where managers and employees jointly set specific goals and use those goals to evaluate
performance.
b. A planning approach used only for crisis management and unforeseen events.
c. Top management setting objectives without input from subordinates.
d. A process of continuous improvement of product quality.

Correct Answer: a

17. SWOT analysis – examining Strengths, Weaknesses, Opportunities, and Threats – is a planning tool used
to:
a. Assess an organization’s internal capabilities and external environment.
b. Evaluate employee performance against goals.
c. Identify the best communication channels in a company.
d. Develop financial budgets for projects.

Correct Answer: a

18. Contingency planning refers to:

a. Developing alternative plans that can be put into action if primary plans fail or if unexpected events
occur.
b. Planning without clear objectives, reacting only when problems arise.
c. Long-term strategic planning for continuous growth.
d. Delegating planning tasks to contingency workers.

Correct Answer: a

19. Strategic planning is usually the responsibility of which level of management?

a. Top management (e.g., CEOs, directors)
b. Middle management
c. First-line supervisors
d. All employees regardless of level

Correct Answer: a

20. Which of the following statements about planning is true?

a. Planning provides a roadmap for other management functions and improves chances of achieving goals.
b. Planning eliminates the need to adjust to changes in the environment.
c. Planning is only necessary at the highest levels of management.
d. Once a plan is made, it guarantees success for the organization.

Correct Answer: a

Organizing
21. Organizing as a function of management primarily involves:
a. Arranging and structuring work and resources to accomplish organizational goals.
b. Motivating and leading employees through rewards and punishments.
c. Setting the organization’s long-term objectives and vision.
d. Measuring performance and correcting deviations.

Correct Answer: a
22. Which of the following is NOT a characteristic of a formal organization structure?
a. Clearly defined hierarchy of authority and reporting relationships.
b. Established rules, procedures, and job descriptions.
c. Informal social interactions and grapevine networks determining work roles.
d. Coordinated efforts focused on achieving official objectives.

Correct Answer: c

23. The principle of unity of command states that each employee should:
a. Receive orders from one and only one direct supervisor.
b. Report to multiple managers to ensure multitasking.
c. Have authority over their own supervisor.
d. Communicate only through the informal organization.

Correct Answer: a

24. The term “span of control” refers to:

a. The number of subordinates reporting directly to a manager.
b. The range of tasks one employee is responsible for.
c. The length of time a manager has held a position.
d. The degree of control an organization has over its external environment.

Correct Answer: a

25. Grouping jobs and activities into logical units (departments) – for example, by function, product, or region
– is known as:
a. Departmentalization
b. Decentralization
c. Specialization
d. Formalization

Correct Answer: a

26. An organizational structure that groups positions into departments based on similar functions or activities
(such as marketing, finance, operations) is called a:
a. Functional structure
b. Divisional structure
c. Matrix structure
d. Network structure

Correct Answer: a

27. A company that organizes its divisions by product lines (e.g., separate divisions for electronics, clothing,
and furniture) is using a:
a. Divisional structure
b. Functional structure
c. Matrix structure
d. Flat structure

Correct Answer: a
28. In a matrix organization:
a. Employees have dual reporting relationships (for example, to both a functional manager and a project or
product manager).
b. All authority is centralized in a single manager for each employee.
c. Departments are grouped solely by geographic region.
d. There is no formal chain of command.

Correct Answer: a

29. Delegation is best described as:

a. Assigning responsibility to a subordinate and granting them the authority to carry out that responsibility.
b. Concentrating all decision-making authority at the top levels of management.
c. Grouping tasks into jobs that can be handled by one person.
d. Rotating employees through different jobs to enhance skills.

Correct Answer: a

30. Which of the following is NOT one of the three key elements of delegation?
a. Authority
b. Responsibility
c. Accountability
d. Hierarchy

Correct Answer: d

31. The terms centralization and decentralization refer to:

a. Where decision-making authority is concentrated in an organization (top level vs. dispersed through
lower levels).
b. The physical location of an organization’s headquarters.
c. The degree to which tasks are standardized.
d. How departments communicate with each other formally.

Correct Answer: a

32. An advantage of a decentralized organizational structure is:

a. Faster decision-making and responsiveness at lower levels of the organization.
b. More consistency and uniformity in decisions across the entire organization.
c. Reduced need for skilled managers at middle and lower levels.
d. All major decisions are made by top executives.

Correct Answer: a

33. Formal authority in an organization is authority that originates from:

a. One’s position in the organizational hierarchy (legitimate power granted by the organization).
b. Personal expertise and knowledge in a particular area.
c. Being liked and admired by others (personal charisma).
d. Informal networks and alliances among employees.

Correct Answer: a
 34. Which of the following is a step in the organizing process?
a. Departmentalizing and grouping related work tasks.
b. Motivating employees through financial incentives.
c. Setting performance standards for goals.
d. Developing a marketing strategy for a new product.

Correct Answer: a

35. In organizing, the chain of command refers to:

a. The unbroken line of authority that links all employees in an organization and shows who reports to
whom.
b. A list of rules that must be followed by employees and managers.
c. The sequence of steps in a production process.
d. The communication network used by informal groups.

Correct Answer: a

Staffing
36. The management function of staffing involves:
a. Recruiting, selecting, training, and developing employees to fill organizational roles.
b. Deciding the organization’s long-term strategic goals.
c. Grouping similar activities into departments.
d. Directing and motivating employees in their daily tasks.

Correct Answer: a

37. Human resource planning is concerned with:

a. Analyzing and forecasting the number and kind of employees an organization will need in the future.
b. Handling daily employee grievances and complaints.
c. Ensuring products meet quality standards.
d. Structuring the organization’s hierarchy.

Correct Answer: a

38. The process of attracting a pool of qualified applicants for open positions is called:
a. Recruitment
b. Selection
c. Orientation
d. Performance appraisal

Correct Answer: a
39. Which of the following statements best describes the difference between recruitment and selection?
a. Recruitment is about attracting potential candidates, whereas selection is about choosing the best
candidate from the pool.
b. Recruitment is a negative process of weeding out applicants, while selection is a positive process of
encouraging candidates.
c. Recruitment happens after the selection process.
d. Selection focuses on generating a large number of applicants, whereas recruitment is about detailed
evaluation.

Correct Answer: a

40. Typically, the first step in a formal selection process (after attracting applicants) is:
a. Preliminary screening of applications/resumes to shortlist candidates.
b. Conducting final round interviews with top management.
c. Providing on-the-job training to new hires.
d. Making a job offer to the best candidate.

Correct Answer: a

41. A job description is a document that primarily contains:

a. A detailed list of the duties, responsibilities, and tasks associated with a job position.
b. The qualifications, skills, and experience required of the job holder.
c. The salary range and benefits for the job.
d. Performance evaluation criteria for the position.

Correct Answer: a

42. Promotions, transfers, and internal job postings are all examples of:
a. Internal recruitment methods (sourcing candidates from within the organization)
b. External recruitment methods
c. Selection tools used in interviews
d. On-the-job training techniques

Correct Answer: a

43. Which of the following is an off-the-job training method (training away from the immediate workplace)?
a. Vestibule training (simulated work environment training)
b. Job rotation
c. Coaching by a supervisor
d. Mentoring on the job

Correct Answer: a

44. The primary purpose of employee training is to:

a. Improve an employee’s skills and performance in their current job role.
b. Evaluate an employee’s performance for compensation decisions.
c. Prepare an employee for future higher-level responsibilities only.
d. Determine which employees should be laid off or terminated.

Correct Answer: a

45. A performance appraisal is a tool used by organizations to:

a. Systematically evaluate and document an employee’s job performance and productivity.
b. Train new employees during their probation period.
 c. Recruit and select employees for job openings.
d. Structure the organization’s departments and hierarchy.

Correct Answer: a

Directing (Motivation & Communication)

46. The management function of directing (leading) involves:
a. Guiding, supervising, and motivating employees to achieve organizational objectives.
b. Developing detailed plans and budgets for the organization.
c. Establishing the company’s structure and hierarchy.
d. Monitoring activities and correcting deviations from plans.

Correct Answer: a

47. Which of the following is NOT an element typically associated with the directing function of
management?
a. Motivation
b. Communication
c. Planning
d. Leadership

Correct Answer: c

48. According to Maslow’s Hierarchy of Needs, which of these needs is at the highest level of the hierarchy?
a. Self-actualization needs (fulfillment of personal potential)
b. Esteem needs (recognition and respect)
c. Safety needs (security and stability)
d. Physiological needs (food, water, shelter)

Correct Answer: a

49. Expanding the content of a job by increasing an employee’s authority, responsibilities, and the challenge in
their work (to make it more rewarding and motivating) is known as:
a. Job enrichment
b. Job enlargement
c. Job rotation
d. Outsourcing

Correct Answer: a

50. According to Frederick Herzberg’s Two-Factor Theory, which of the following would be considered a
motivator (satisfier) that can increase job satisfaction?
a. Achievement and recognition for doing a good job
b. Salary and job security
c. Comfortable working conditions
d. Company policies and administration

Correct Answer: a
51. Theory Y (in McGregor’s Theory X and Theory Y) assumes that employees:
a. View work as natural, can be self-directed, and seek responsibility if committed to objectives.
b. Are inherently lazy and will avoid work if not closely supervised.
c. Are motivated only by external control and threats of punishment.
d. Do not value work and only care about financial rewards.

Correct Answer: a

52. Equity theory in motivation is based on the idea that employees:

a. Compare their job inputs and outcomes with those of others to determine if they are being treated fairly.
b. Are motivated only by equitable financial rewards.
c. Will perform best when they have equity in the company (ownership shares).
d. Are either Theory X or Theory Y oriented in the workplace.

Correct Answer: a

53. According to Victor Vroom’s Expectancy Theory, motivation is a function of expectancy, instrumentality,
and ______.
a. Valence (the value an individual places on the expected outcome)
b. Variety (having different tasks to do)
c. Victory (the need to win in all tasks)
d. Vitality (the energy a person brings to work)

Correct Answer: a

54. Communication that flows from a subordinate to a superior (e.g., from an employee up to their manager)
is known as:
a. Upward communication
b. Downward communication
c. Horizontal communication
d. Grapevine communication

Correct Answer: a

55. The informal communication network in organizations, often based on social relationships and rumor, is
called the:
a. Grapevine
b. Vertical network
c. Formal chain
d. Feedback loop

Correct Answer: a

56. Active listening involves:

a. Paying full attention to the speaker, understanding their message, providing feedback, and remembering
the information.
b. Waiting for one’s turn to speak rather than listening.
c. Interrupting frequently to offer solutions.
d. Passively hearing the message without responding.

Correct Answer: a
 57. Which of the following is a common barrier to effective communication in organizations?
a. Noise or physical distractions interfering with the message
b. Using clear and simple language
c. Active feedback from the receiver
d. Trust between the sender and receiver

Correct Answer: a

58. In management, coordination refers to:

a. Integrating the activities of different departments and individuals so they work together smoothly.
b. The right of a manager to give orders to subordinates.
c. Training employees to perform multiple tasks (multiskilling).
d. A form of control that involves strict monitoring of employee movements.

Correct Answer: a

59. According to McClelland’s Acquired Needs Theory, the three important needs that motivate people are
the need for power, the need for affiliation, and the need for ______.
a. Achievement
b. Security
c. Survival
d. Equity

Correct Answer: a

60. Which of the following actions by a manager would most likely improve employee motivation?
a. Recognizing and praising employees for excellent performance and contributions.
b. Micromanaging every task and decision the employees make.
c. Ignoring employees’ ideas when making decisions.
d. Keeping all information about company performance secret from staff.

Correct Answer: a

Leadership
61. Which statement best distinguishes leadership from management?
a. Leadership is about inspiring and influencing people to follow, whereas management is about planning,
organizing, and coordinating tasks.
b. Leadership only happens at upper levels of an organization, while management happens at lower levels.
c. Management focuses on people, and leadership focuses on systems and structure.
d. Leaders always hold formal positions of authority, whereas managers do not.

Correct Answer: a

62. A leader who makes decisions unilaterally, gives orders, and expects obedience is demonstrating a(n) ____
leadership style.
a. Autocratic
b. Democratic
c. Laissez-faire
d. Participative

Correct Answer: a
63. A leader who encourages subordinates to participate in decision-making, consults team members, and
values their input is using a ____ leadership style.
a. Democratic (participative)
b. Autocratic
c. Laissez-faire
d. Authoritarian

Correct Answer: a

64. In terms of leadership styles, a laissez-faire leader tends to:

a. Give employees a high degree of autonomy and freedom to make decisions, with little day-to-day
guidance.
b. Closely supervise employees and dictate all actions.
c. Involve employees in decision processes but retain the final decision authority.
d. Rely strictly on rules and procedures to manage the team.

Correct Answer: a

65. Fiedler’s Contingency Model of leadership suggests that leadership effectiveness depends on:
a. A proper match between the leader’s style and the favorability of the situational context.
b. The leader’s ability to adapt his or her style to any situation fluidly.
c. The personal charisma and traits of the leader alone.
d. How much training and experience the leader has.

Correct Answer: a

66. According to Hersey and Blanchard’s Situational Leadership Theory, the most appropriate leadership
style is determined primarily by the ______ of the followers.
a. Readiness or maturity (ability and willingness to perform the task)
b. Number of years of work experience
c. Personal relationship with the leader
d. Department or function they belong to

Correct Answer: a

67. The Path-Goal Theory of leadership (House) proposes that an effective leader:
a. Clears the path to help subordinates achieve their goals by providing direction, support, and removing
obstacles as needed.
b. Should always set extremely challenging goals for followers to push them.
c. Focuses on establishing a strict hierarchy and chain of command.
d. Uses a single leadership style in all situations for consistency.

Correct Answer: a

68. Which of the following is a characteristic of a transformational leader?

a. They inspire and excite followers with a vision to achieve extraordinary outcomes beyond immediate
self-interests.
b. They focus mainly on routine tasks and use rewards or punishment to get results.
c. They avoid interacting with the team and leave decisions to employees.
d. They rely solely on their formal authority to command obedience.

Correct Answer: a

69. A transactional leader is best described as one who:

a. Motivates followers by exchanging rewards for performance and using corrective actions when
 subordinates fail to meet goals.
b. Inspires employees with a compelling vision and encourages them to exceed their own self-interest for
the sake of the organization.
c. Gives employees complete freedom with little or no guidance.
d. Focuses primarily on employees’ emotional needs rather than task objectives.

Correct Answer: a

70. Referent power (as a source of a leader’s influence) comes from:

a. The leader’s personal charisma, likability, and the respect/admiration they inspire in followers.
b. The leader’s formal position and authority in the organization’s hierarchy.
c. The leader’s ability to grant rewards (such as promotions or raises).
d. The leader’s specialized knowledge or expertise.

Correct Answer: a

71. Expert power is derived from a leader’s:

a. Specialized knowledge, skills or expertise that others depend on.
b. Formal role and title within the organization.
c. Control over punishments and negative consequences.
d. Personal attractiveness and charm.

Correct Answer: a

72. In Blake and Mouton’s Managerial (Leadership) Grid, the “team leader” (9,9) style is characterized by:
a. High concern for both people (relationships) and production (tasks).
b. High concern for production and low concern for people.
c. High concern for people and low concern for production.
d. Low concern for both people and production.

Correct Answer: a

73. The Trait theory of leadership posits that:

a. Effective leaders possess certain innate personal characteristics, and leaders are often “born” with these
traits.
b. Leadership capability is solely determined by the situation, not the person.
c. Anyone can be trained to be an effective leader regardless of personal attributes.
d. The best leadership style depends on the followers’ readiness level.

Correct Answer: a

74. In the context of leadership, emotional intelligence (EQ) refers to a leader’s ability to:
a. Understand and manage their own emotions, as well as recognize and influence the emotions of others.
b. Use emotions instead of logic when making decisions.
c. Keep all personal feelings entirely separate from work interactions.
d. Have a very high IQ or intellectual capability.

Correct Answer: a

75. The Ohio State studies on leadership identified two key dimensions of leader behavior. These two
dimensions are:
a. Initiating structure and consideration (task-oriented behavior and people-oriented behavior).
b. Autocratic and democratic behavior.
c. Transformational and transactional behavior.
d. Legitimate power and referent power.
 Correct Answer: a

Controlling
76. Controlling, as a function of management, involves:
a. Monitoring actual performance, comparing it with planned goals/standards, and taking corrective action
when necessary.
b. Directing employees and motivating them to achieve goals.
c. Establishing the company’s mission and high-level strategy.
d. Structuring the organization’s departments and hierarchy.

Correct Answer: a

77. What is the correct sequence of steps in the basic control process?
a. Establish standards → Measure actual performance → Compare actual performance with standards →
Take corrective action if necessary.
b. Measure performance → Establish standards → Compare with standards → Take corrective action →
Reward employees.
c. Establish objectives → Organize tasks → Lead people → Evaluate performance.
d. Set a goal → Assign a task → Get feedback → Start over.

Correct Answer: a

78. A control method that focuses on preventing problems before they occur, by monitoring inputs and
anticipating challenges, is called:
a. Feedforward control
b. Concurrent control
c. Feedback control
d. Reactive control

Correct Answer: a

79. When a manager monitors ongoing operations and corrects problems as they happen in real time, this is
an example of:
a. Concurrent control
b. Feedforward control
c. Feedback control
d. Strategic control

Correct Answer: a

80. Reviewing financial statements at the end of the quarter to compare actual results against the budget and
then making adjustments is an example of:
a. Feedback control
b. Feedforward control
c. Concurrent control
d. Decentralized control

Correct Answer: a
81. The principle of management by exception suggests that managers should:
a. Concentrate on significant deviations from expected results and let routine performance continue without
interference.
b. Examine every minor detail of performance continuously.
c. Only manage when there are exceptions and otherwise stay completely uninvolved.
d. Delegate all control functions to automated systems.

Correct Answer: a

82. A common technique for financial control in organizations is:

a. Budgetary control – setting budgets and then monitoring actual revenue and expenses against those
budgets.
b. Brainstorming – to generate cost-saving ideas.
c. Job rotation – to prevent fraud in financial positions.
d. Delegation – to ensure spending authority is spread out.

Correct Answer: a

83. Benchmarking is a control tool that involves:

a. Comparing the organization’s performance and practices against those of best-in-class organizations to
identify areas for improvement.
b. Tracking employees’ arrival and departure times as a measure of discipline.
c. Setting minimum standards (benchmarks) that all employees must meet or be terminated.
d. Utilizing financial ratios to compare performance across different time periods.

Correct Answer: a

84. An effective control system should be:

a. Timely, accurate, and flexible, providing information that is prompt, reliable, and adaptable to changes.
b. Rigid, complex, and secretive, to ensure employees do not manipulate results.
c. Punitive in nature, focusing on penalties for any deviation from the plan.
d. Entirely manual, with no reliance on technology or data.

Correct Answer: a

85. If actual performance falls below the standards set in the planning phase, management should:
a. Take corrective action to address the deviation and get performance back on track (after investigating the
cause).
b. Lower the performance standards to match the actual performance.
c. Ignore the variance and continue to operate as usual.
d. Punish employees regardless of the reasons for the shortfall.

Correct Answer: a
Decision Making
86. In decision-making, the process usually begins with:
a. Identifying and defining the problem or opportunity that requires a decision.
b. Generating a list of alternative solutions.
c. Evaluating the potential consequences of options.
d. Implementing the chosen alternative.

Correct Answer: a

87. A programmed decision is one that:

a. Addresses a routine, repetitive problem by applying established rules or procedures.
b. Deals with a unique or novel situation that has not been encountered before.
c. Is made by a computer or algorithm rather than a human.
d. Can only be made by top management.

Correct Answer: a

88. Non-programmed decisions are typically made in response to:

a. New, unusual, or unstructured situations that require creative solutions.
b. Everyday recurring issues with clear standard operating procedures.
c. Automated processes that don’t require human judgment.
d. Minor issues that have little impact on the organization.

Correct Answer: a

89. The concept of bounded rationality, developed by Herbert Simon, suggests that decision-makers:
a. Have limitations on their information, time, and cognitive capacity, so they often settle for a satisfactory
solution rather than an optimal one.
b. Have access to all information and can always make fully rational, optimal decisions.
c. Make decisions solely based on emotional instincts, ignoring rational analysis.
d. Are bounded by upper management’s directives and cannot make independent choices.

Correct Answer: a

90. Satisficing in decision-making means:

a. Selecting the first option that meets the minimum requirements, rather than exhaustively searching for
the optimal solution.
b. Using consensus to satisfy all group members’ preferences.
c. Postponing decisions until complete information is available.
d. Striving to satisfy every stakeholder completely with each decision.

Correct Answer: a

91. Which of the following is an advantage of group decision-making compared to individual decision-
making?
a. Group decisions can draw from a broader range of knowledge, experience, and perspectives, potentially
leading to better solutions.
b. Group decisions always take less time and are more efficient.
c. Group decisions are free from biases or conflicts.
d. Group decisions guarantee acceptance and implementation of the decision.
 Correct Answer: a

92. One potential disadvantage of group decision-making is:

a. Groupthink, where the desire for consensus and harmony in the group outweighs realistic appraisal of
alternatives and suppresses dissenting views.
b. Increased diversity of viewpoints, which can confuse the decision process.
c. Higher accountability, since multiple people are responsible.
d. That it always results in poorer decisions than individual decision-making.

Correct Answer: a

93. Brainstorming is a technique used in the decision-making process to:

a. Generate a large number of creative ideas without immediate criticism or evaluation.
b. Systematically evaluate each alternative against a set of criteria.
c. Allow experts to provide input anonymously in multiple rounds.
d. Rank ideas in order of feasibility and impact.

Correct Answer: a

94. The Delphi technique is a method of decision-making that:

a. Seeks to achieve consensus among a panel of experts who respond to questionnaires anonymously, with
feedback provided between rounds.
b. Involves all members of a team meeting face-to-face to discuss options openly.
c. Relies on a single expert to make a decision on behalf of a group.
d. Uses a random selection of alternatives when consensus cannot be reached.

Correct Answer: a

95. A decision-making condition of certainty means that the decision maker:

a. Has all necessary information and knows exactly what the outcomes of each choice will be.
b. Has to estimate probabilities for outcomes (some risk is involved).
c. Lacks any information about outcomes or probabilities (complete uncertainty).
d. Is indecisive due to having too much information.

Correct Answer: a

96. Under conditions of risk, a manager making a decision:

a. Has some information and can estimate the probability of different outcomes (outcomes are not
guaranteed, but likelihoods are known).
b. Knows the exact outcome of each alternative with certainty.
c. Has absolutely no idea about the outcomes or their probabilities.
d. Will always choose the alternative with the highest possible payoff regardless of risk.

Correct Answer: a

97. The tendency for managers to continue investing in a failing project or decision despite clear evidence that
it is not working (often due to sunk costs or reluctance to admit error) is known as:
a. Escalation of commitment
b. Prospect theory
c. Bounded rationality
d. The Hawthorne effect

Correct Answer: a
98. A decision tree is a useful tool in decision-making because it:
a. Graphically maps out decisions and their possible consequences, including chance events, outcomes, and
risks, helping managers analyze complex choices.
b. Lays out the organizational hierarchy for who is allowed to make decisions.
c. Lists decisions in a tree structure based on priority without showing outcomes.
d. Organizes brainstorming ideas into categories.

Correct Answer: a

99. Conducting a cost-benefit analysis in decision-making involves:

a. Comparing the expected costs and benefits of each potential option to determine which has the best net
advantage.
b. Choosing the cheapest alternative regardless of benefits.
c. Ensuring every department gets an equal share of the budget.
d. Using intuition instead of systematic evaluation of options.

Correct Answer: a

100. Which of the following practices can improve the quality of decisions in an organization?
a. Using a structured decision-making process and encouraging open discussion and critique of alternatives
before choosing.
b. Limiting input to one or two top executives to avoid conflicting opinions.
c. Relying solely on gut feeling or intuition for all major decisions.
d. Postponing decisions until absolute certainty is achieved, even if opportunities are lost.

Correct Answer: a