​You Can Either Invest in Project a or B

question 9

Multiple Choice

​You can either invest in project A or B.Project A could have a value of $150 with a probability of 0.1 or a value of $75 with probability 0.9.Project B could have a value of $110 with probability 0.2 or a value of $65 with a probability of 0.8.Which project should you invest in?

• A)​Project A
• B)Project B
• C)Neither of the projects
• D)​You cannot tell from the information presented

Acknowledge how market forces of supply and demand guide resource allocation and industry size.

Comprehend the principle of the "invisible hand" and its implications on economic efficiency and public interest.

Identify and understand the phenomenon of "creative destruction" and its role in market innovation and progress.

Recognize the mechanisms through which market economies resolve basic economic questions regarding production, distribution, and consumption.

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Definitions:

Marginal Cost

The expense involved in creating one more unit of a product or service.

Constant Returns to Scale

A situation in which output increases by the same proportion as inputs when the scale of production is changed.

Long-run Average Total Cost

The average total cost when all factors of production are variable and economies of scale are fully exploited, indicating the lowest possible cost per unit.

Economies of Scale

Economies of scale refer to the cost advantage that arises with an increased output of a product, as fixed costs are spread out over more units of production, leading to a decrease in the per-unit cost.