John is trying to decide whether to expand his business or not. If he continues his business as it is, with no expansion, there is a 50 percent chance he will earn $100,000 and a 50 percent chance he will earn $300,000. If he does expand, there is a 30 percent chance he will earn $100,000, a 30 percent chance he will earn $300,000 and a 40 percent chance he will earn $500,000. It will cost him $150,000 to expand. If John decides to expand based on expected value, it means that:
A. the difference in expected earnings from expanding versus not must exceed $150,000.
B. the sum of expected earnings from expanding and from not must exceed $150,000.
C. the difference in expected earnings from expanding versus not must not exceed $150,000.
D. his expected earnings from expansion must exceed $150,000.
A. the difference in expected earnings from expanding versus not must exceed $150,000.
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A) discount rate. B) required reserve ratio. C) deposit multiplier. D) money multiplier.
When the interest rate is above the equilibrium interest rate, there is an excess ________ money and the interest rate will ________
A) demand for; rise B) demand for; fall C) supply of; fall D) supply of; rise
Social disapproval is likely to be more effective:
A. in a small town than a large city. B. than taxation. C. in solving a free rider problem than a tragedy of the commons problem. D. when community members have only spurious relationships with others in the area.
Which furniture production process would have the highest furniture prices?
A. Furniture made by handsaw and hammer B. Furniture made with power equipment C. Furniture with a mix of handmade and automated labor D. Furniture made in an automated furniture factory