George is considering investing in a frozen yogurt store. If the store does well he will make $20,0000, but if the store does poorly he will make only $10,000. There is a 50 percent chance of each outcome
His utility of wealth schedule is in the above table. The expected utility of this investment is A) 115.
B) 140.
C) 165.
D) 180.
C
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In a market economy, the decision regarding allocation of resources is made by
A. the operation of the forces of supply and demand. B. policy authorities in Washington, D.C. C. budget planners in state capitals. D. committees from a variety of economic interest groups. E. All of the responses are correct.
Canned milk was only rationed to babies and small children during World War II. This rationing was an example of allocation by
A) market price. B) first-come, first-served. C) sharing equally. D) force. E) personal characteristics.
When a monopolist practices perfect price discrimination,
a. consumers receive no consumer surplus b. there is allocative inefficiency c. there is a deadweight loss d. profit is lower than for the nondiscriminating monopolist e. total revenue is less than for the nondiscriminating monopolist
Suppose one knows two facts: first, the market for prescription drugs experiences chronic shortages and second, the government sets the price for prescription drugs. One can conclude that the government has:
A. set the price below the equilibrium price. B. set the price too high. C. set the price above the equilibrium price. D. encouraged buyers to hoard prescription drugs.