Refer to Scenario 5.5. Jalopy Automotive's executives,
A) if risk-neutral, would fix the flaw because it enables them to have a sure outcome.
B) if risk-neutral, would fix the flaw because the cost of fixing the flaw is less than the expected cost of not fixing it.
C) if risk-loving, would fix the flaw because it enables them to have a sure outcome.
D) if risk-averse, would not fix the flaw because the cost of fixing the flaw is more than the expected cost of not fixing it.
E) would fix the flaw regardless of their risk preference, because of the large probability of high-cost outcomes.
B
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A change in monetary policy affects
A) consumption expenditure, government expenditures on goods and services, and net exports. B) consumption expenditure, productivity, and net exports. C) government expenditures on goods and services because it affects the government's budget balance. D) consumption expenditure, investment, and net exports. E) investment, government expenditures on goods and services, and net exports.
In the short run, in a perfectly competitive market, a firm will shut down if
A) P < AVC for all levels of output. B) P < ATC for all levels of output. C) ATC > P > AVC for all levels of output. D) P > AFC for all levels of output.
Define monopolistic competition
Which of the following is not a component of the demand for loanable funds?
A. Household purchases of housing and durable consumer goods. B. Business purchases of capital goods. C. Government financing of the public debt. D. Household saving.