You Are Trying to Decide in Which of the Three

question 30

Multiple Choice

You are trying to decide in which of the three companies you should invest. Refer to the following Payoff Table. If the probability of the market declining in the next year is 0.5, which of the following statements are correct?
i. The Expected Opportunity Loss for Company A is $225.
ii. The Expected Opportunity Loss for Company B is $75.
iii. The Expected Opportunity Loss for Company C is $200.

• A) (i), (ii) and (iii) are all correct statements
• B) (i) is a correct statement but not (ii) or (iii).
• C) (ii) is a correct statement but not (i) or (iii).
• D) (ii) and (iii) are correct statements but not (i).
• E) All statements are false

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Definitions:

Clean Water

Water that is free from pollutants, contaminants, and harmful microorganisms, safe for consumption and suitable for use in various domestic and industrial activities.

Property Right

A legal right or privilege, granted by law, to use, control, and derive benefits from a resource or property.

Marginal Social Cost

The cumulative expense to society for creating one more unit of a product or service, encompassing both the personal costs and any external effects.

Private Marginal Cost

Private marginal cost refers to the cost that a company incurs for producing an additional unit of a good or service, excluding any external costs.