Sam, after taking a 200 loan from the bank to finance an investment that pays 1000 50 of the time and 0 50 of the time at a 100 interest, discovers another riskier investment that pays out 5,000 but only 10 of the time, while the other 90 of the time it pays zero. Would the he want to switch to the riskier investment?
a. Yes because his return has increased
b. No because his liability to the bank has increased
c. No because his return has decreased
d. None of the above
Question 2
How many units should the firm produce? In other words, at what level of output does marginal cost equal marginal revenue?
a. 1
b. 2
c. 3
d. 4
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