Risk-averse individuals make risky investments
A) never.
B) when the investment's expected return exceeds the return on a non-risky investment.
C) when the investment's expected return adequately compensates for the risk.
D) only when they are feeling irrational.
C
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Large minimum efficient scale of plant combined with limited market demand may lead to:
A. natural monopoly. B. patent monopoly. C. government franchise monopoly. D. shared monopoly.
Suppose the production function for coffee (C) is C = min(B,W), where B = beans in pounds and W = water in gallons. Suppose the price of water is $.10 per gallon and the price of beans is $10 per pound. The cost minimizing combination of beans and water for C = 200 is
a. B = 200, W = 2000 b. B = 2000, W = 200 c. B = 100, W = 100 d. B = 200, W = 200
Price elasticity of demand and price elasticity of supply are both influenced by
a. the availability of close substitutes for the product b. the proportion of the consumer's budget spend on the product c. the length of the adjustment period considered d. technological conditions such as the additional costs of increasing production e. none of the above
The government is pursuing an expansionary policy if it:
a. decreases its spending and increases its tax revenues. b. increases its spending or increases its tax revenues. c. decreases its spending or reduces its tax revenues. d. increases its spending and/or reduces its tax revenues.