Tim is offered two gambles. With gamble A, he either gains $2 or loses $1 with a 50 percent probability. With gamble B, he either gains $3 or loses $2 with a 50 percent probability. Tim prefers gamble B to gamble A. What can we conclude?
A. Tim is risk neutral.
B. Tim is risk loving.
C. Tim is risk averse.
D. Insufficient information to determine.
Answer: B
You might also like to view...
In the Keynesian model, if the actual price level is higher than the expected price level, then
a. output is above potential output. b. output is always at potential output. c. output is below potential output. d. output is moving towards potential output.
Which of the following is true at the output level where P=MC?
A) The monopolist is maximizing profit. B) The monopolist is not maximizing profit and should increase output. C) The monopolist is not maximizing profit and should decrease output. D) The monopolist is earning a positive profit.
An approach that can be taken by someone directly involved in a transaction to solve the problems caused by information asymmetry is:
A. statistical discrimination. B. proofing. C. mandating that information be shared. D. All of these are ways to solve information asymmetry.
The marginal principle implies that an individual should produce or consume where:
A. marginal benefit exceeds marginal cost. B. marginal benefit is less than marginal cost. C. marginal benefit equals marginal cost. D. total benefit equals total cost.