Van, whose utility of wealth curve is shown in the above figure, owns a home that is valued at $100,000. There is a 10 percent chance that the house will be destroyed by hurricane. The value of insurance to Van is
A) $10,000.
B) $15,000.
C) $20,000.
D) $30,000.
D
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Quantity supplied increases when the price of a good increases because
A. producers find it more profitable to make the item. B. potential buyers “drop out” of the market, so the good becomes more abundant. C. as demand decreases with a high price, surpluses appear. D. All of these responses are correct.
Which of the following is incorrect?
A. As the American average price level rises, American goods become relatively more expensive so that our exports fall and our imports rise. B. As the average price level falls, the interest rate declines, and interest-rate sensitive spending increases. C. When the average price level increases, real balances increase, businesses and households find themselves wealthier and therefore increase their spending. D. An increase in aggregate supply tends to increase real domestic output and reduce the average price level.
An activity is productive if it
What will be an ideal response?
Consider the following information, and assume that opportunity costs are constant: On one hand, residents of Country A can produce more corn in a year than residents of Country B, but they can produce computers at a lower opportunity cost than residents of country B. On the other hand, residents of country B can produce more computers in a year than residents of Country A, but they can produce corn at a lower opportunity cost than residents of country A. It can be concluded that residents of
A. Country B should produce computers and trade them for corn produced in Country B. B. Country A should produce computers and trade them for corn produced in Country B. C. Country A should produce corn and trade it for computers produced in Country B. D. both countries should choose not to trade.