Even when racetrack bettors know very little about the characteristics of horses, why are their aggregate bets often good estimates of the true probabilities of winning, placing, and showing?
The odds of a horse winning a race are calculated from the actual amounts bet on it and on other horses. If bettors lay down their money on the basis of past winning records and present condition of the horses, their relative wagers correctly predict the actual probability that each horse will win a given race, and all bettors, on average, break even.
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If the demand for U. S. dollars goes down, the exchange rate will
A) increase and, as a result, net exports in the United States will decrease. B) decrease and, as a result, net exports in the United States will increase C) increase and, as a result, net exports in the United States will increase D) decrease and, as a result, net exports in the United States will decrease
Moral hazard may arise in lending when small firms borrow funds from banks for one project (e.g., buy new machinery for a factory) and actually use the funds in other ways (e.g., buy the manager a new corporate jet)
What is the source of the asymmetric information problem in this case? A) The bank has more information about the true cost of the corporate jet than the firm. B) The bank has more information about the opportunity cost of the loaned funds. C) The firm has more information about the actual use of the funds than the bank. D) The firm has more information about the interest rate on the loan than the bank.