What Method of Probability Assessment Would Most Likely Be Used

question 95

Multiple Choice

What method of probability assessment would most likely be used to assess the probability that a major earthquake will occur in California in the next three years?

• A) Classical probability based on the ratio of the number of ways the event can occur
• B) Relative frequency based on previous history
• C) Subjective probability based on expert opinion
• D) Independent probability based on two unrelated outcomes

---

Definitions:

Diseconomies of Scale

A situation where, as a firm increases its production, the costs per unit increase.

Constant Returns to Scale

A situation in which increasing the amount of inputs results in a proportional increase in outputs.

Diseconomies of Scale

A situation in which production costs increase as a firm’s output increases, leading to decreased efficiency.

Decreasing Returns to Scale

Decreasing Returns to Scale occurs when a firm increases all inputs by a certain proportion, but the output increases by a smaller proportion, indicating reduced efficiency.