A defendant believes there is a 50 percent chance that the plaintiff will win $1,000,000 and a 50 percent chance that the plaintiff will lose and be awarded nothing (zero). The plaintiff believes that there is a 40 percent chance that they will win $1,000,000 and a 60 percent chance that they will be awarded nothing (zero). The plaintiff's litigation cost is $200,000 and the defendant's
litigation cost is $300,000. The defendant would be willing to pay any amount up to ________ to settle and the plaintiff would be willing to accept any amount greater than ________ to settle.
A) $600,000; $400,000
B) $800,000; $200,000
C) $200,000; $800,000
D) $700,000; $100,000
B) $800,000; $200,000
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Assuming no change in the nominal exchange rate, how will a decrease in the price level in the United States relative to France affect the real exchange rate between the two countries? (Assume the United States is the "domestic" country.)
A) The real exchange rate will fall. B) The real exchange rate will be unaffected. C) The real exchange rate will rise. D) The impact on the real exchange rate cannot be predicted.
The market for control of corporations serves to
A) create moral hazard. B) address the principal-agent problem. C) add to economies of scale. D) address the problem of adverse selection.
If you are really poor, often your only credit option may be ________________.
Fill in the blank(s) with the appropriate word(s).
Which would be considered an investment according to economists?
A. The purchase of stock in MacDonald's. B. The selling of IBM corporate bonds. C. The purchase of a new machine by Ford. D. The buying of shares of Janus mutual funds.