Suppose Alice is deciding whether or not to go to a New York Giants game. Alice's enjoyment and thus decision, depends upon two uncertain events that are out of her control: whether the Giants win and whether it snows. She will be happiest if the Giants win and it does not snow. The newspaper reports a 35% chance for snow and the Giants record suggests a 40% chance of winning. The probability that the Giants win and that it does not snow is:

The present value formula makes it apparent that:

A) a decline in the interest rate will cause a decision maker to weigh recent period returns relatively more heavily than before the decline. B) an increase in the interest rate will cause a decision maker to weigh distant (or future) returns relatively more heavily than before the increase. C) the present value of a fixed sum decreases as the time until it is to be paid increases. D) all of the above E) both A and C.

What is one problem with using a Clarke tax to finance government provision of a public good?

a. People tend to overstate their preferences for the public good when a Clarke tax is imposed. b. The government may decide against providing the public good, even when it would be efficient to do so. c. The Clarke tax is not a fair tax, because everyone pays the same amount regardless of income. d. The revenues collected from the Clarke tax may not cover the cost of the public good.