John is trying to decide whether to expand his business or not. If he continues his business as it is, with no expansion, there is a 50 percent chance he will earn $100,000 and a 50 percent chance he will earn $300,000. If he does expand, there is a 30 percent chance he will earn $100,000, a 30 percent chance he will earn $300,000 and a 40 percent chance he will earn $500,000. It will cost him $150,000 to expand. John expects the value of his earnings to be ________ if he expands and ________ if he does not expand.
A. $320,000; $200,000
B. $170,000; $50,000
C. -$30,000; $200,000
D. $120,000; $200,000
Answer: A
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In a two-period model with production, an increase in current domestic total factor productivity
A) increases domestic output and increases the current account surplus. B) increases domestic output and decreases the current account surplus. C) decreases domestic output and increases the current account surplus. D) decreases domestic output and decreases the current account surplus.
A temporary resource price differential refers to a price difference
a. that will not lead to a shift of resources among users b. caused by lack of resource mobility c. caused by economic rent d. that, for example, causes more workers to move to higher-paid areas e. caused by minimum wage legislation
At any given price level, equilibrium GDP on the expenditure side occurs when ____
a. Y = C + I + G ? (X ? IM) b. Y = C + I ? G c. Y = C + I + G + (X ? IM) d. Y = C + X + G + (X ? IM)
The demand curve for capital
a. is vertical. b. is horizontal. c. is derived from households' decisions concerning saving and spending. d. reflects the marginal productivity of capital.