When the Price of a Resource Goes Up and Firms

question 112

Multiple Choice

When the price of a resource goes up and firms seek other suitable resources, this is called the

• A) substitution in production effect.
• B) substitution in demand effect.
• C) elasticity effect.
• D) inelasticity effect.

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Definitions:

Risk Neutral

A condition in which an individual or entity shows indifference between choices that have different levels of risk, focusing solely on potential outcomes regardless of uncertainty.

Expected Level

the anticipated quantity or value in a given context, often based on statistical analysis or previous observations.

Risk Aversion

A preference for options that offer more certainty and less potential for loss.

Insurance Policy

A contract between an individual or entity and an insurance company, outlining the terms under which insurance coverage is provided.