Making Many Risky Bets

question 35

Multiple Choice

Making many risky bets

• A)reduces your expected value.
• B)is called risk-pooling and can reduce risk.
• C)is irrational.
• D)is called risk pooling and increases your expected value.

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Definitions:

Economic Profit

The difference between a firm's total revenues and its total costs, including both explicit and implicit costs.

Opportunity Costs

The penalty of not opting for the next superior alternative while making a decision.

Total Revenues

The total amount of income generated by the sale of goods or services related to the company's primary operations.

Economic Profits

The surplus or profit earned by a firm over and above the total costs of production, including both explicit and implicit costs, signifying an above-normal return.