Which of the following is a property of an S-shaped curve that corresponds to the prospect theory value function?
A) The curve passes through the reference point at the origin.
B) Both sections of the curve are convex to the horizontal, outcome axis.
C) The curve is symmetric with respect to gains and losses.
D) None of the above.
A
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Which of the following is (are) a basic principle(s) when estimating a project's cash flows?
a. cash flows should be measured on a pre-tax basis b. cash flows should ignore depreciation since it is a non-cash charge c. only direct effects of a project should be included in the cash flow calculations d. cash flows should be measured on an incremental basis e. all of the above
A college has found that during every home football game, a group of students sits on a hillside next to the stadium and watches the game without purchasing tickets. In economics, the problem that this college is facing is referred to as a
a. common good problem. b. free rider problem. c. onlooker problem. d. deadweight loss problem.
Allocative efficiency is achieved when the production is such that
A) the marginal benefit exceeds the marginal cost by as much as possible. B) marginal cost equals zero. C) marginal benefit is equal to marginal cost. D) the production point is on the PPF. E) None of the above is true.
A firm that can sell essentially the same product with the same quality under different brand names that have different perceived quality, the firm
A) has a moral hazard problem. B) creates noise in the market. C) creates an arbitrage opportunity. D) is engaging in unfair trading practices.