If a person is risk neutral, then she
A) is indifferent about playing a fair game.
B) will pay a premium to avoid a fair game.
C) has a horizontal utility function.
D) has zero marginal utility of wealth.
A
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Suppose electricity (E) can be produced with coal (C) or gas (G) to operate steam turbines (T). Suppose gas is more efficiently burned than coal but that they are otherwise perfect substitutes. E = min((G + .5C), T). The isoquants between gas and coal will be
a. hyperbolas b. quarter circles c. straight lines
The Coase solution to the problem of externalities
a. applies in every situation where externalities are present b. only applies to activities that generate positive externalities c. only works under perfect competition d. only works when bargaining costs are low e. can lead to an increase in the common pool problem
Starting from long run equilibrium, in response to a decrease in AD: a. The price level will increase more in the long run than in the short run
b. The short run equilibrium level of real output will be greater in the long run than in the short run. c. Neither the price level nor real output will change in the long run. d. Both a. and b. are correct
What does each party in international trade anticipate from the exchange?
a. reinforcement of its cultural heritage b. an imbalance in the trade relationship c. improvement in its economic welfare d. deception on the part of its trading partners