Economists assume people are motivated by
A. social justice.
B. unlimited resources.
C. pride.
D. self-interest.
Answer: D
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Mutual funds are a good and relatively inexpensive way for individual investors to diversify
Indicate whether the statement is true or false
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 $5.75 and the expected payoff is $5. C. not play the game since it costs $5.75 and the expected payoff is $5. D. play the game since it costs $5, and the expected payoff is $5.75.
Which of the following best describes "the value of a statistical life"?
A. The monetary value treated as the cost of an additional death from pollution B. The cost to society of an average person's lifetime consumption C. The total monetary value of a person's current income and expected future income D. The price society would pay, on average, to avoid a certain death
The theories of consumption were developed by
A) Friedman and Phelps. B) Hicks and Hansen. C) Modigliani and Friedman. D) Lucas and Sargent.