An individual with a constant marginal utility of income will be
A) risk averse.
B) risk neutral.
C) risk loving.
D) insufficient information for a decision
B
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Refer to Pollutants. Suppose transactions costs are zero. Also suppose the chemical plant is not liable for the farm's crop damages and can continue to pollute the stream. What will be the result of private bargaining between the farm and the chemical plant?
A chemical plant's production adds pollutants to a stream which irrigates a farm's crops. The pollutants damage the farm's crops, increasing the firm's costs by $800 per month. The crop damage may be eliminated in two ways: the chemical plant can install a new filtering system costing $300 per month, or the farm can install a new irrigation system costing $600 per month. a. The chemical plant will pay the farm $800 per month in crop damages. b. The farm will bear the $800 per month cost of crop damages. c. The chemical plant will install the new filtering system. d. The farm will install the new irrigation system.
If the marginal product of labor is decreasing, then marginal cost of production must be rising
Indicate whether the statement is true or false
Refer to the above figures. Which of the panels would be consistent with the situation in which external costs exist?
A) Panel 1 B) Panel 2 C) Panels 1 and 2 D) neither panel
If the price elasticity of demand for a good is 3.0, it is clear that the good
a. would be a poor choice to tax if the object is to raise tax revenue b. would be an excellent choice to tax if the object is to raise revenue c. is an essential good d. has a demand curve that is price inelastic at every price level e. is a complementary good