A manager believes there is a 10 percent chance their firm will have to pay $1,000,000 and a 90 percent chance they will be found innocent and pay nothing except the legal fees of $200,000. If the manager chooses to not settle for $300,000 and to enter the litigation instead, which of the following is true?
A) The manager is a risk lover.
B) The manager is risk averse.
C) The manager is risk neutral.
D) The manager is risk intolerant.
A) The manager is a risk lover.
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According to the shutdown rule, a firm should produce no output in the short run if
A) price is below minimum average total cost. B) price is above minimum average total cost. C) total revenues are lower than total fixed costs. D) price is below minimum average variable costs.
Which of the following will NOT affect the supply of cars?
A) an increase in the price of steel B) an improvement in automobile production technology C) an increase in the productivity of auto workers D) a decrease in the price of cars
It is Valentine's Day and Jason is desperately looking all over town for a dozen roses to give to Judy. Most likely, Jason's price elasticity of demand is:
a. infinitely large. b. negative. c. equal to one. d. greater than one. e. less than one.
Adam Smith believed that the individual pursuit of self-interest:
A. is impossible in a perfectly competitive market. B. should usually be discouraged. C. often promotes the broader interests of society. D. always leads to an efficient outcome.