Define risk aversion and give an example of a risk-averse person?
What will be an ideal response?
Risk aversion is a characteristic of a person that dislikes risk. An example of this is someone who takes out rental or home insurance to reduce the risk of some kind of catastrophe from happening.
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Figure 3-20
Refer to . If 40 units of the good are being bought and sold, then
a.
cost to sellers is equal to the value to buyers.
b.
the value to buyers is greater than the cost to sellers.
c.
the cost to sellers is greater than the value to buyers.
d.
producer surplus would be greater than consumer surplus.
If the economy in the graph shown is currently at point B, and the government increases its spending, the likely outcome will be that the:
A. economy will experience deflation. B. economy's unemployment rate will increase. C. economy will increase its level of output. D. All of these are likely to be true.
Consider a supply curve of the form: Q = c + dP. If d equals zero, then supply is:
A) completely inelastic. B) inelastic, but not completely inelastic. C) elastic, but not infinitely elastic. D) infinitely elastic
Under which of the following market conditions is it most difficult to maintain a cartel agreement?
a. There are many firms in the industry and these firms have similar costs. b. There are many firms in the industry and these firms have different costs. c. There are few firms in the industry and these firms have similar costs. d. There are few firms in the industry and these firms have different costs.