Suppose you have $200 with which you can buy shares of stock from two companies: ABC Hot Chocolate Company and XYZ Lemonade. Each company's stock currently sells for $100 per share. If the temperature next year is lower than average, the stock price for ABC will increase by $20, and the stock price for XYZ will not change. If the temperature next year is higher than average, the stock price for XYZ will increase by $20, and the stock price for ABC will not change. There is a 50 percent chance that it will be colder than average next year, and a 25 percent chance that it will be warmer than average. If you purchase two shares of XYZ stock and no shares of ABC stock, your expected gain will be ________.
A. $20
B. $30
C. $10
D. $0
Answer: C
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Which of the following statements best defines private costs?
A) They are internal in the sense that the firm or household must explicitly take them into account. B) They are costs borne by people other than those who commit the action. C) They are synonymous with social costs. D) They represent explicit costs incurred by business firms in the private sector.
Which factor receives the profit from production?
A. Land B. Labor C. Capital D. Entrepreneurship
Refer to the graph shown.
Assuming each carnival game costs $1 and each Ferris wheel ride costs $2, a consumer with $10 to spend will optimally choose to consume at point:
A. A. B. B. C. C. D. D.
Public goods are basically
A) rival in consumption. B) nonrival in consumption. C) depletable in consumption. D) nondepletable in consumption.