Assume Brandon's benefit function for water is S(W) = ?W and he consumes water both in droughts, WD, or in the rainy season, WR. Assume his current consumption bundle is WD = 400 and WR = 100 and the probability of drought is 0.75. Brandon's risk premium is:
A. 250 units of water.
B. 325 units of water.
C. 17.5 units of water.
D. 18.75 units of water.
D. 18.75 units of water.
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Due to inflation, nominal prices are usually
A) equal to real prices. B) smaller than real prices. C) larger than real prices. D) a constant proportion different from real prices.
In a multi-product firm, cannibalization is
a. An increase in the quality of both the brand's products b. A decrease in the quality of both the brands products c. An increase in both the brand's sales d. An increase in one of the brand's sales due to the decrease in sales of the other.
_____ is a good measure of economic well being if policy makers want to satisfy the preferences of buyers
Fill in the blank(s) with the appropriate word(s).
The "good news" for consumers from monopolistic competition is ________ but the "bad news" for producers is that ________.
A. lower prices than monopoly; there are higher production costs B. lower prices than monopoly; there are higher travel costs C. lower prices than monopoly; there is less product variety D. greater product variety; product prices are higher