A manager believes there is a 5 percent chance their firm will have to pay $1,000,000 and a 95 percent chance they will be found innocent and pay nothing except the legal fees of $100,000. If the manager chooses to not enter into the litigation and to settle for $150,000 (pay the plaintiff), which of the following is true?
A) The manager is a risk lover.
B) The manager is risk neutral.
C) The manager is risk intolerant.
D) The manager is risk averse.
D) The manager is risk averse.
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According to the Coase Theorem, private solutions to externalities can lead to the socially efficient outcome when: i. transaction costs are negligible ii. property rights are clearly defined iii. the number of parties involved is small
a. (i), (ii), and (iii) b. (i) and (ii) only c. (iii) only d. (ii) and (iii) only
Discuss the major programs to combat poverty and evaluate them on the basis of work incentives
The balance of payments constraint refers to the limits on:
A. exchange rate policy imposed by flexible exchange rates. B. currency convertibility observed in most developing countries. C. domestic macroeconomic policy, arising from a shortage of international reserves. D. macroeconomic policy resulting from IMF conditionality.
A consumer who pays extra to shop at an IGA grocery store and avoid Walmart exhibits a
A. "pathologically-irrational preference." B. systematically inefficient decision-making ability. C. "revealed preference." D. compulsive behavior.