Gus happens to spot a couple of sunbathers during his walk in the park. The sunbathers generate
A) a negative externality if Gus is disturbed by their activity.
B) a positive externality if Gus enjoys witnessing their activity.
C) both of the above.
D) neither of the above, as long as no monetary payment was involved.
C
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Which of the following industries is most likely to represent the monopolistic competition market structure?
A) automobiles B) tobacco products C) restaurants D) farm equipment
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. If John decides to expand based on expected value, it means that:
A. the sum of expected earnings from expanding and from not must exceed $150,000. B. his expected earnings from expansion must exceed $150,000. C. the difference in expected earnings from expanding versus not must exceed $150,000. D. the difference in expected earnings from expanding versus not must not exceed $150,000.