In Computing an Expected Value (EV), the Weights Are _____

question 12

Multiple Choice

In computing an expected value (EV) , the weights are _____.

• A) decision alternative probabilities
• B) in pounds or some unit of weight
• C) in dollars or some unit of currency
• D) the state-of-nature probabilities

---

Definitions:

Income Effect

The change in an individual's or an economy's consumption resulting from a change in real income.

Normal Good

A product whose demand increases as consumer income rises, indicating a direct relationship between income and demand for the good.

Income Effect

The change in an individual's or economy's consumption patterns resulting from a change in real income.

Substitution Effect

The financial concept stating that when prices increase or incomes drop, individuals will substitute higher-priced goods with more affordable options.