Scenario 5.6: Consider the Information in the Table Below, Describing Choices for Choices

question 136

Multiple Choice

Scenario 5.6:
Consider the information in the table below, describing choices for a new doctor. The outcomes represent different macroeconomic environments, which the individual cannot predict.

-Refer to Scenario 5.6. If the doctor is risk-averse, she would accept:

• A) $50,000 for sure rather than take the risk of being a researcher.
• B) $60,000 for sure (the minimum HMO outcome) rather than take the risk of being a researcher.
• C) $95,000 for sure rather than face option 1 and option 2 in research.
• D) $275,000 for sure (the average of option 1 and option 2 in research), but not less, rather than face the risk of those two options.
• E) the research position because it has the highest possible income.

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Definitions:

NFIB Survey

A research tool used by the National Federation of Independent Business to collect data on small business trends and sentiments.

Poor Earnings

A term used to describe a lower than expected profit or loss reported by a company, indicating underperformance.

Herzberg

Refers to Frederick Herzberg, and emphasizes his work in motivational theory, specifically the differentiation between factors that increase job satisfaction and those that reduce dissatisfaction.

Lower Level Need

Pertains to basic, foundational human needs often described in Maslow's Hierarchy of Needs, such as physiological and safety needs.