Alex, who is risk-neutral, is looking for a one-bedroom apartment to rent for the month of August while he's on vacation in Seattle. All of the one-bedroom apartments in the neighborhood where he wants to stay are of equal quality, but 70 percent rent for $700 per month, 20 percent rent for $600 per month, and 10 percent rent for $500 per month. The first apartment Alex finds rents for $700 per month. Suppose Alex is risk-neutral. If the cost to Alex of searching for another apartment is $30, then will he search for another apartment?
A. No, because searching for another apartment is a less-than-fair gamble.
B. Yes, because searching for another apartment is a better-than-fair gamble.
C. Yes, because searching for another apartment is a fair gamble.
D. No, because searching for another apartment is a fair gamble.
Answer: B
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The WTO also ruled on the U.S. restriction of gasoline imports from Venezuela and Brazil in 1994 on environmental grounds. What was the outcome?
a. The United States could ban those imports because they violated the U.S. Clean Air Act. b. They could not ban the imports because they had not given Venezuela and Brazil a grace period as they had given their own U.S. companies. c. The United States could not use "environmental protection" as an excuse for every trade dispute that came along. d. The United States could bring counter-charges against Venezuela and Brazil on the banana issue.
Asymmetric information problems are worse the __________ the borrowing firm, since there is __________ publicly available information about those firms
A) larger; more B) larger; less C) smaller; more D) smaller; less