Suppose Jack and Kate are at the town fair and are choosing which game to play. The first game has a bag with four marbles in it-1 red marble and 3 blue ones. The player draws one marble from the bag; if it is red, they win $20 and if it is blue, they win $1. The second game has a bag with 10 marbles in it-1 red, 4 blue, and 5 green. The player draws one marble from the bag; if it is red, they win $20; if it is blue, they win $5; and if it is green, they win $1. Both games cost $5 to play. Jack is considering whether to play the first game. If Jack only cares about the expected value of the outcome and does not care about risk, he should:
A. not play the game, since it costs $5 and the expected payoff is $5.75.
B. play the game since it costs $5, and the expected payoff is $5.75.
C. play the game since it costs $5.75 and the expected payoff is $5.
D. not play the game since it costs $5.75 and the expected payoff is $5.
B. play the game since it costs $5, and the expected payoff is $5.75.
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Demand for a product tends to be more elastic the longer the time period considered because
A) sellers have more time to expand production. B) buyers have more time to search for substitutes. C) price increases over time make the price larger relative to buyers' incomes. D) the inverse relationship between the price and the quantity demanded weakens over time. E) buyers get used to the new price.
In the short run, a profit maximizing firm will respond to a reduction in the wage rate by
A. decreasing output. B. hiring less labor. C. hiring more capital. D. hiring more labor.
Under a capitalist economic system,
a. the state owns all or most of the resources b. people are forced to work for a living c. resources are privately owned d. the government determines the allocation of resources e. prices eventually become unnecessary
If the economy is on the flat part of the aggregate supply curve, expansionary fiscal policy works well to increase output with little increase in the price level.
Answer the following statement true (T) or false (F)