When the Probability of an Event Is Very, Very Small

question 10

Multiple Choice

When the probability of an event is very, very small, individuals tend to:

• A) give a disproportionately large weight to its probability of occurring.
• B) ignore that possibility in their decision making.
• C) hesitate between assigning a large or a small likelihood that it will happen to them.
• D) take unnecessary risks.

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Definitions:

Quantity Demanded

The total amount of a good or service that consumers are willing and able to purchase at a given price level, within a specific time frame.

Law of Supply

An economic principle stating that as the price of a good or service increases, the quantity supplied of that good or service also increases, and vice versa, all else being equal.

Law of Demand

A principle that describes the inverse relationship between the price of a good or service and the quantity demanded by consumers.

Demand for Salsa

The quantity of salsa that buyers are willing and able to purchase at various prices, reflecting consumer preferences for this product.