If an investment has a 20% (0.20) probability of returning $1,000; a 30% (0.30) probability of returning $1,500; and a 50% (0.50) probability of returning $1,800; the expected value of the investment is:
A. $1,433.33
B. $1,600.00
C. $1,550.00
D. $2,800.00
Answer: C
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Suppose the marginal utilities for the first three cans of soda are 100, 80 and 60, respectively. The total utility received from consuming 2 cans is
A) 20. B) 80. C) 90. D) 180.
All other things held constant, premiums on options will increase when the
A) exercise price increases. B) volatility of the underlying asset increases. C) term to maturity decreases. D) futures price increases.
An excess quantity supplied can be corrected by
A. a decrease in demand. B. legally fixing the price at its present level. C. a fall in price. D. an increase in supply.
When a perfectly competitive, well-functioning market is in equilibrium:
A. deadweight loss is zero. B. total surplus is maximized. C. the market is efficient. D. All of these are true.