We refer to situations in which individuals need to act collectively to reach solutions that will make everyone better off as:
A. collective-action problems.
B. free-rider problems.
C. moral hazard problems.
D. public-mind problems.
A. collective-action problems.
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People who run their own businesses
A) can keep their labor costs down by not hiring any employees. B) have lower labor costs if they dislike working for anyone else than if they don't mind working for others. C) have no labor costs unless the business is incorporated. D) have the same labor costs as people who hire employees to run their businesses.
Which of the following evidence does not support the expected utility theory?
A) People assign disproportionately high weights to rare events. B) Risk-averse people do not engage in fair bets. C) Risk-loving people do not purchase insurance policies. D) Risk-neutral people engage in fair bets.
Refer to Table 5.1. A risk-averse student making a decision solely on the basis of the above information
A) would definitely become a math major. B) would definitely not become an English major. C) would definitely become a political science major. D) might be either a mathematics major or English major, depending upon the utility of the average offer. E) would definitely be indifferent between the accounting major and the English major if the probability of finding a job in accounting were any value higher than 0.95.
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