Use the graph above to answer the following question. Suppose that Jim is in casino in Las Vegas and wins a $60,000 jackpot
The staff tells him that he can keep it or play one more game that will allow him to increase his jackpot earnings by an additional $20,000 . The game involves simply flipping a coin. If it turns up heads he earns the extra $20,000 . However, if it turns up tails he loses $20,000 of his $60,000 jackpot. Given the utility function above what is he likely to do and why?
The marginal utility of the extra $20,000 is only 1 if he wins. However, the marginal utility that he loses if it comes up tails is 3 . Therefore, Jim will simply take his $60,000 and refuse to play the second game.
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Refer to the scenario above. Which of the following will be true if Alice stops the auction at $30,000?
A) She will earn zero consumer surplus. B) She will earn a consumer surplus of $5,000. C) She will earn a consumer surplus of $30,000. D) She will earn a consumer surplus of $16,000.
Accounting profits are found by total revenues minus
A) explicit costs. B) explicit and implicit costs. C) implicit costs. D) all opportunity costs.