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Principles of Microeconomics

Business

Quiz 17 :

Uncertainty and Asymmetric Information

Quiz 17 :

Uncertainty and Asymmetric Information

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Mark has two job offers when he graduates from college. Mark views the offers as identical, except for the salary terms. The first offer is at a fixed annual salary of $40,000. The second offer is at a fixed salary of $20,000 plus a possible bonus of $40,000. Mark believes that he has a 50-50 chance of earning the bonus. If Mark takes the offer that maximizes his expected utility and is risk-loving, which job offer will he choose?
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Multiple Choice
Answer:

Answer:

B

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Refer to the information provided in Figure 17.1 below to answer the question(s) that follow. img Figure 17.1 -Refer to Figure 17.1. Dmitri has two job offers when he graduates from college. Dmitri views the offers as identical, except for the salary terms. The first offer is at a fixed annual salary of $40,000. The second offer is at a fixed salary of $20,000 plus a possible bonus of $40,000. Dmitri believes that he has a 50-50 chance of earning the bonus. Dmitri's expected value from the first job offer is ________ and is ________ from the second job offer.
Free
Multiple Choice
Answer:

Answer:

B

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Refer to the information provided in Figure 17.2 below to answer the question(s) that follow. img Figure 17.2 -Refer to Figure 17.2. We would say that Sam is risk neutral based on his
Free
Multiple Choice
Answer:

Answer:

A

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Consider the following game. You roll a six-sided die and each time you roll a 6, you get $30. For all other outcomes you pay $6. Since the expected value of this game is $0, the game is called a(n)
Multiple Choice
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Refer to the information provided in Figure 17.1 below to answer the question(s) that follow. img Figure 17.1 -Refer to Figure 17.1. Suppose John's utility from income is given in the figure. From this we would say that John is
Multiple Choice
Answer:
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Refer to the information provided in Figure 17.1 below to answer the question(s) that follow. img Figure 17.1 -Refer to Figure 17.1. Dmitri has two job offers when he graduates from college. Dmitri views the offers as identical, except for the salary terms. The first offer is at a fixed annual salary of $40,000. The second offer is at a fixed salary of $20,000 plus a possible bonus of $40,000. Dmitri believes that he has a 50-50 chance of earning the bonus. If Dmitri takes the offer that maximizes his expected utility and is he is risk averse, then
Multiple Choice
Answer:
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Mark has two job offers when he graduates from college. Mark views the offers as identical, except for the salary terms. The first offer is at a fixed annual salary of $50,000. The second offer is at a fixed salary of $20,000 plus a possible bonus of $60,000. Mark believes that he has a 50-50 chance of earning the bonus. If Mark takes the offer that maximizes his expected utility and is risk-neutral, which job offer will he choose?
Multiple Choice
Answer:
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Refer to the information provided in Figure 17.2 below to answer the question(s) that follow. img Figure 17.2 -Refer to Figure 17.2. Fiona has two job offers when she graduates from college. Fiona views the offers as identical, except for the salary terms. The first offer is at a fixed annual salary of $60,000. The second offer is at a fixed salary of $20,000 plus a possible bonus of $80,000. Fiona believes that she has a 50-50 chance of earning the bonus. If Fiona takes the offer that maximizes her expected utility and she is risk-neutral, then
Multiple Choice
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The sum of the utilities from each possible outcome of a situation weighted by the probability of that outcome is known as
Multiple Choice
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Refer to the information provided in Figure 17.1 below to answer the question(s) that follow. img Figure 17.1 -Refer to Figure 17.1. John has two job offers when he graduates from college. John views the offers as identical, except for the salary terms. The first offer is at a fixed annual salary of $50,000. The second offer is at a fixed salary of $20,000 plus a possible bonus of $60,000. John believes that he has a 50-50 chance of earning the bonus. What is the expected value of John's income for each job offer?
Multiple Choice
Answer:
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Consider the following game. You roll a six-sided die and each time you roll a 6, you get $30. For all other outcomes you pay $6. What is the expected value of the game?
Multiple Choice
Answer:
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Refer to the information provided in Figure 17.2 below to answer the question(s) that follow. img Figure 17.2 -Refer to Figure 17.2. Suppose Sam's utility from income is given in the diagram. From this we would say that Sam is
Multiple Choice
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For most people, as their income increases, their utility from that income ________ at a(n) ________ rate.
Multiple Choice
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Refer to the information provided in Figure 17.2 below to answer the question(s) that follow. img Figure 17.2 -Refer to Figure 17.2. Sam has two job offers when he graduates from college. Sam views the offers as identical, except for the salary terms. The first offer is at a fixed annual salary of $60,000. The second offer is at a fixed salary of $30,000 plus a possible bonus of $60,000. Sam believes that he has a 50-50 chance of earning the bonus. If Sam takes the offer that maximizes his expected utility and is risk-neutral, which job offer will he choose?
Multiple Choice
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Consider the following game. You roll a six-sided die and each time you roll a 6, you get $30. For all other outcomes you pay $6. The $30 when you "win" and the -$6 when you "lose" are called
Multiple Choice
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Consider the following game. You pick a card from a deck and each time you select an ace, you get $260. For all other cards you must pay $13. What is the expected value of the game?
Multiple Choice
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Refer to the information provided in Figure 17.1 below to answer the question(s) that follow. img Figure 17.1 -Refer to Figure 17.1. John has two job offers when he graduates from college. John views the offers as identical, except for the salary terms. The first offer is at a fixed annual salary of $50,000. The second offer is at a fixed salary of $20,000 plus a possible bonus of $60,000. John believes that he has a 50-50 chance of earning the bonus. If John takes the offer that maximizes his expected utility and is risk-averse, which job offer will he choose?
Multiple Choice
Answer:
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Refer to the information provided in Figure 17.1 below to answer the question(s) that follow. img Figure 17.1 -Refer to Figure 17.1. John has two job offers when he graduates from college. John views the offers as identical, except for the salary terms. The first offer is at a fixed annual salary of $50,000. The second offer is at a fixed salary of $20,000 plus a possible bonus of $60,000. John believes that he has a 50-50 chance of earning the bonus. What is John's expected utility for each job offer?
Multiple Choice
Answer:
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Refer to the information provided in Figure 17.1 below to answer the question(s) that follow. img Figure 17.1 -Refer to Figure 17.1. We would say that Dmitri is risk averse based on his
Multiple Choice
Answer:
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Refer to the information provided in Figure 17.1 below to answer the question(s) that follow. img Figure 17.1 -Refer to Figure 17.1. Dmitri has two job offers when he graduates from college. Dmitri views the offers as identical, except for the salary terms. The first offer is at a fixed annual salary of $40,000. The second offer is at a fixed salary of $20,000 plus a possible bonus of $40,000. Dmitri believes that he has a 50-50 chance of earning the bonus. Dmitri's expected utility from the first job offer is ________ and it is ________ from the second job offer.
Multiple Choice
Answer:
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