What Would Best Explain Why a Generally Risk-Averse Person Would

question 42

Multiple Choice

What would best explain why a generally risk-averse person would bet $100 during a night of blackjack in Las Vegas?

• A) Risk aversion relates to income choices only, not expenditure choices.
• B) Risk-averse people may gamble under some circumstances.
• C) The economics of gambling and the economics of income risk are two different things.
• D) Risk-averse people attach high subjective probabilities to favorable outcomes, even when objective probabilities are known.

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Definitions:

Transportation

The shipment of products to buyers.

Warehousing

The design and operation of facilities to receive, store, and ship products.

Promotion Mix

The blend of different marketing methods used by a business, such as advertising, sales promotion, public relations, and direct marketing.

Publicity

Nonpersonal communication transmitted through the mass media but not paid for directly by the firm.