Refer to Scenario 5.5. Jalopy Automotive's executives,
A) if risk-neutral, would fix the flaw because it enables them to have a sure outcome.
B) if risk-neutral, would fix the flaw because the cost of fixing the flaw is less than the expected cost of not fixing it.
C) if risk-loving, would fix the flaw because it enables them to have a sure outcome.
D) if risk-averse, would not fix the flaw because the cost of fixing the flaw is more than the expected cost of not fixing it.
E) would fix the flaw regardless of their risk preference, because of the large probability of high-cost outcomes.
B
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What is allocative efficiency?
A) It refers to a situation in which resources are allocated such that the last unit of output produced provides a marginal benefit to consumers equal to the marginal cost of producing it. B) It refers to a situation in which resources are allocated to their highest profit use. C) It refers to a situation in which resources are allocated such that goods can be produced at their lowest possible average cost. D) It refers to a situation in which resources are allocated fairly to all consumers in a society.
According to traditional Keynesian analysis, which has a greater impact on aggregate demand, changing taxes or changing government expenditures? Why?