Risk Is

question 83

Multiple Choice

Risk is

• A)different than uncertainty in that the probability of an uncertain event can be estimated whereas the probability of a risky event cannot be.
• B)the source of all economic rent.
• C)considered a major factor in the theory of profit that emphasizes the entrepreneur as innovator.
• D)equal to the probability that an event will occur divided by the probability that the event will not occur.
• E)different than uncertainty in that the probability of a risky event can be estimated whereas the probability of an uncertain event cannot be.

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Definitions:

Total Cost

The sum of all expenses, variable and fixed, incurred in producing goods or services.

Average Fixed Cost

The total fixed costs of production divided by the quantity of output produced, typically decreasing as production scale increases.

Average Variable Cost

The total variable costs (costs that change with output level) divided by the quantity of output produced.

AVC

Average Variable Cost; the cost of variable inputs divided by the quantity of output produced.