X Pays a Yearly Salary of $52,000, Regardless of Thestate

question 253

Multiple Choice

X pays a yearly salary of $52,000, regardless of thestate of the economy. Job Y pays a yearly salary of$10,000 in a bad economy and $70,000 in a goodeconomy. The probability of a bad economy is 0.30.Which job would most people prefer?

• A)Job Y because the expected payoff is $70,000 seventy percent of the time.
• B)Job X because it is more certain than the $52,000 expected payoff of Job Y.
• C)Job X because $52,000 exceeds the expected payoff of Job Y by $3,000.
• D)Job Y because the expected payoff of $70,000 is greater than $55,000.

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Definitions:

Multilateral Organization

An international institution or group involving three or more countries working together on issues of common interest.

International Trade

The exchange of goods and services across international borders, driven by global demand and supply, tariffs, trade agreements, and economic policies.

Several Governments

Indicates the existence or involvement of multiple governmental bodies or authorities.

World Bank

A multilateral organization designed to provide financing, advice, and research to developing nations to aid their economic advancement.