John is trying to decide whether to expand his business or not. If he continues his business as it is, with no expansion, there is a 50 percent chance he will earn $100,000 and a 50 percent chance he will earn $300,000. If he does expand, there is a 30 percent chance he will earn $100,000, a 30 percent chance he will earn $300,000 and a 40 percent chance he will earn $500,000. It will cost him $150,000 to expand. John should:
A. expand, since he expects to earn $320,000 by expanding, and it will only cost him $150,000 to do so.
B. not expand, because there is a chance John will earn the same as if he didn't expand and would be out the $150,000 investment.
C. not expand, since he expects to earn $120,000 more by expanding than not, and it will cost him $150,000 to do so.
D. expand, since he has a 70 percent chance of earning more than the cost of expansion.
C. not expand, since he expects to earn $120,000 more by expanding than not, and it will cost him $150,000 to do so.
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The demand curve for Japanese yen will shift to the right when
A) there is a decrease in demand for Japanese-made goods in the United States. B) there is no change in the demand for Japanese-made goods in the United States. C) there is a decrease in the demand for U.S.-made goods in Japan. D) there is an increase in the demand for Japanese-made goods in the United States.
Average variable costs:
A. decrease when marginal product rises, and increase when marginal product declines. B. increase when marginal product rises, and decrease when marginal product declines. C. increase when output declines, and decrease when output rises. D. decrease when output declines, and increase when output declines.
The impact of an increase in the money supply is a(n):
a. increase in the interest rate, which in turn stimulates investment and GDP. b. decrease in the interest rate, which in turn stimulates investment and GDP. c. reduction in the general level of prices, which will increase the disposable income of households. d. improvement in technology, which will stimulate both output and employment.
Refer to the accompanying figure. As Jeff watches more movies, his marginal utility:
A. gets close to one B. does not change C. gets smaller D. gets larger