A manager is attempting to assess the probability of a recession ending in the next six months, and its impact on expected profitability. The manager believes there is a 75 percent chance the recession will end in six months and profits will return to $400 million. However, there is a 25 percent chance the recession will not end in six months, resulting in a $5 million loss. The standard deviation of profits over the next six months is:
A. $320.18 million.
B. $286.39 million.
C. $0 million.
D. $175.37 million.
Answer: D
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In a market system, what must take place for quantity demanded to continually be equated with quantity supplied?
A) Price controls must be applied by governments. B) Relative prices must be able to adjust to market clearing levels. C) Tastes and preferences of consumers must adjust to eliminate surpluses or shortages. D) Businesses must engage in involuntary, unprofitable exchanges to eliminate surpluses or shortages.
Refer to the above figure. At a price of four cents, a(n) ________ of bubble gum will exist in the market
A) surplus B) shortage C) excess quantity demanded D) equilibrium quantity
If the industry in the above figure was perfectly competitive, the level of output would
A) be less than the single-price monopoly level of output.
B) be the same as the single-price monopoly level of output.
C) exceed the single-price monopoly level of output by 20 units per day.
D) exceed the single-price monopoly level of output by 60 units per day.
Which of the following explains why the marginal cost curve has a U shape?
A) Initially, the marginal product of labor falls, then rises. B) Initially, the average product of labor rises, then falls. C) Initially, the marginal product of labor rises, then falls. D) Initially, the average cost of production rises, then falls.