Explain the following: Risk results from the fact that more outcomes could happen than will happen.

What will be an ideal response?


Risk results from uncertainty, not knowing what will happen. For example before a coin is flipped we know that there are two possible outcomes, heads or tails. Once the coin is flipped, there will only be one outcome. The risk is in not knowing a priori what is going to happen. If there is only one possible outcome, there is certainty and therefore, no risk.

Economics

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Indicate whether the statement is true or false

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Which of the following is heavily subsidized by state and local governments?

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Just like a monopolist, a monopolistically competitive firm:

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