The key distinction between risk and uncertainty is
a. Risk cannot be quantified, priced or traded
b. Uncertainty refers to not knowing possible outcomes or their probabilities
c. Uncertainty is modeled by listing the possible outcomes and assigning probabilities to the outcomes
d. Risk has to do with not knowing the probability distribution of a random variable
b
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The outcome of the state of nature affects the payoff to the agent under a
A) fixed-fee contract. B) hire contract. C) contingent contract. D) All of the above.
The basic difference between macroeconomics and microeconomics is:
a. microeconomics concentrates on individual markets while macroeconomics focuses primarily on international trade. b. microeconomics concentrates on the behavior of individual consumers while macroeconomics focuses on the behavior of firms. c. microeconomics concentrates on the behavior of individual consumers and firms while macroeconomics focuses on the performance of the entire economy. d. microeconomics explores the causes of inflation while macroeconomics focuses on the causes of unemployment.