Hudson Has Two Job Offers When He Graduates from College

question 128

Multiple Choice

Hudson has two job offers when he graduates from college. Hudson views the offers as identical, except for the salary terms. The first offer is at a fixed annual salary of $45,000. The second offer is at a fixed salary of $25,000 plus a possible bonus of $40,000. Hudson believes that he has a 50-50 chance of earning the bonus. If Hudson takes the offer that maximizes his expected utility and he is risk-neutral, then

• A) he will take the first offer.
• B) he will take the second offer.
• C) he is indifferent between the offers-both yield the same expected utility.
• D) Indeterminate from the given information-we cannot say what he will do.

Understand the concept of opportunity cost and its application in economic decisions.

Demonstrate knowledge of absolute and comparative advantage in the context of both domestic and international trade.

Examine the gains from specialization and trade for individuals and countries.

Analyze the impact of trade on prosperity and how it affects different stakeholders.

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Definitions:

High Enthusiasm

Represents a state of intense excitement or eagerness, crucial for driving motivation and engagement in various contexts.

Creativity

The capacity to create, invent, or discover new ideas, solutions, or art forms that are valued for their uniqueness and utility.

Consultative Style

A management approach where leaders seek input from their team members before making decisions.

Fashion Week

A series of events usually held semi-annually in major cities where designers and fashion houses display their latest collections to buyers and the media.