Suppose someone knew the probability of incurring a $10,000 medical expense was 5%, and the odds of being healthy and incurring no expenses was 95%. If they used that information to compare the expected cost to them ($500) with the $400 premium it would cost to get full coverage and decided not to buy the insurance, then economists would say they are
A. risk-loving.
B. irrational.
C. risk-neutral.
D. risk-averse.
Answer: A
You might also like to view...
According to Friedman, the apparent conflict between cross-section data which shows a saving rate that varies with income group and time-series data which shows that the saving ratio over the past century is fairly constant is resolved by
A) pointing out that cross-section and time-series data are not comparable. B) interpreting the low saving of poor people as due to the fact that they must buy necessities. C) interpreting the high saving of rich people as due to the transitory nature of much income earned by the rich. D) distinguished between a permanent marginal propensity to consume and a transitory marginal propensity to consume.
An initial allocation of goods is called a(n)
A) endowment. B) inheritance. C) pareto set. D) general-equilibrium goods set.
Suppose that in a country the total holdings of banks were as follows: required reserves = $45 million excess reserves = $15 million deposits = $750 million loans = $600 million Treasury bonds = $90 million Show that the balance sheet balances if these
are the only assets and liabilities. Assuming that people hold no currency, what happens to each of these values if the central bank changes the reserve requirement ratio to 2%, banks still want to hold the same percentage of excess reserves, and banks don't change their holdings of Treasury bonds? How much does the money supply change by?
The primary purpose of WTO is to:
A. protect the United States from cheap foreign labor. B. foster trade among nations. C. promote the dumping of foreign products. D. increase worldwide tariffs.