Suppose Jack and Kate are at the town fair and are choosing which game to play. The first game has a bag with four marbles in it-1 red marble and 3 blue ones. The player draws one marble from the bag; if it is red, they win $20 and if it is blue, they win $1. The second game has a bag with 10 marbles in it-1 red, 4 blue, and 5 green. The player draws one marble from the bag; if it is red, they win $20; if it is blue, they win $5; and if it is green, they win $1. Both games cost $5 to play. Jack decides to play the first game, and Kate decides to play the second game as described in the scenario. The expected value of the payoff:
A. is higher for Jack than for Kate.
B. is lower for Jack than for Kate.
C. is the same in both games, because there's only one red marble.
D. is higher in the second game because half the marbles entail a payback of at least what she pays to play the game.
A. is higher for Jack than for Kate.
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Refer to Figure 1.7. If this economy is currently producing at point F, then by employing more resources this economy
A. Can move to points D, G, or J. B. Can move to point D, but not points G or J. C. Can move to point G, but not points D or J. D. Will remain at point F.
Demand is income elastic if
A) a large percentage increase in income results in a small percentage increase in quantity demanded. B) a small percentage increase in income results in a large percentage increase in quantity demanded. C) an increase in income does not affect the quantity demanded. D) the good in question has close substitutes.
If a firm can earn a profit stream of $50,000 per year for 10 years, that profit stream is worth
A) more than $500,000 today. B) $500,000 today. C) less than $500,000 today, but a positive amount. D) nothing today E) some amount, but whether it is more, less or the same as $500,000 cannot be determined.
The legal reserve requirement that banks must adhere to is set by
a. Congress b. the FDIC c. the Treasury Department d. the banking system e. the Federal Reserve