One aspect of prospect theory is that people tend to
A) be very risk averse to large gains.
B) be very risk averse to losses.
C) love losses more than gains.
D) hate gains regardless of potential losses.
B
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The infant industry argument has a normative economic basis because
A) clearly, all industries need to be protected. B) protected industries are selected on a factual basis. C) the government must decide which industries should be protected. D) political corruption is the only deciding factor.
Elaine’s firm is in a perfectly competitive industry. Why doesn’t Elaine try to sell more of her product by lowering its price below the market price?
a. Her demand curve is not elastic. b. Doing so would be considered unethical price chiseling. c. Her competitors would not allow it. d. She can sell all she wants at the market price.