Suppose an investor with state-independent tastes is offered the choice between investment A and investment B. Investment A offers profit of $2,000 with probability 0.4, $4,000 with probability 0.2 and $6,000 with probability 0.4. Investment B offers profit of $2,000 with probability of 0.5 and $6,000 with probability 0.5. If the investor is risk averse, he will choose investment A.
Answer the following statement true (T) or false (F)
True
Rationale: The two investments have the same expected profit (of $4,000), but investment B has more risk.
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Assume the firms in a monopolistically competitive industry initially are earning positive economic profits. Which of the following will not occur over time?
A) The firms' economic profits will be reduced. B) New firms will enter. C) Demand for the existing firms' output will become more inelastic. D) The number of substitutes available in the industry will increase.
In the ten year period 1981-1990, 1202 commercial banks were closed, with a peak of 206 failures in 1989. This rate of failures was approximately ________ times greater than that in the period from 1934 to 1980
A) two B) three C) five D) ten