When There Is Perfect Information on the Outcome of an Event,the

question 7

Multiple Choice

When there is perfect information on the outcome of an event,the revised probability of the event will be:

• A)equal to zero.
• B)the same as the prior probability.
• C)equal to one.
• D)higher than the prior probability.
• E)smaller than the prior probability.

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Definitions:

Income Elasticity

A measure of how the demand for a good or service changes relative to a change in consumers' income.

Normal Good

A good for which demand increases as the income of consumers increases and decreases as the income of consumers decreases.

Inferior

A term used in economics to describe goods whose demand decreases as the income of the consumer increases, contrasted with normal goods.

Input Costs

Input costs are the prices of the raw materials, labor, and other resources required to produce a good or service.