Author Question: A risk-averse individual is offered a gamble that promises a gain of 1000 with probability 0.25 and ... (Read 37 times)

jon_i · **on:** Jul 1, 2018

A risk-averse individual is offered a gamble that promises a gain of 1000 with probability 0.25 and a loss of 300 with probability 0.75 . Given this situation, he or she will:
a. definitely take the gamble.
b. definitely not take the gamble.
c. definitely take the gamble if his or her income is high enough.
d. take an action that cannot be determined given the information available.

Question 2

Even ideal cartels tend to be unstable because
a. firms typically prefer competition to collusion as competition, because it leads to more profits.
b. collusion leads to lowest possible overall profits in the industry.
c. oligopolistic managers are extremely risk loving.
d. firms can benefit by secretly selling more than they promised the other firms
e. all of the above