A weakness of the market system of resource allocation is that
a. such economies tend to be stagnant
b. most participants in such an economy have low standards of living
c. there are no limits on an individual's freedom of action
d. it does not address the problem of initial inequities in endowments
e. its participants are free to act according to their desires
D
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Failing to be fully informed may be efficient if information
A) is free. B) is scarce. C) is subject to increasing returns. D) has no opportunity cost of production.
John is trying to decide whether to expand his business or not. If he continues his business as it is, with no expansion, there is a 50 percent chance he will earn $100,000 and a 50 percent chance he will earn $300,000. If he does expand, there is a 30 percent chance he will earn $100,000, a 30 percent chance he will earn $300,000 and a 40 percent chance he will earn $500,000. It will cost him $150,000 to expand. John expects the value of his earnings to be ________ if he expands and ________ if he does not expand.
A. $320,000; $200,000 B. $170,000; $50,000 C. -$30,000; $200,000 D. $120,000; $200,000