When People Use ____________ Probability Weights, People Assign Too _________

question 32

Multiple Choice

When people use ____________ probability weights, people assign too _________ weight to very low probabilities and too _________ to high probabilities.

• A) nonlinear, little, much
• B) nonlinear, much, little
• C) linear, much, little

---

Definitions:

Economies of Scale

Cost advantages that entities attain due to the scale of operation, with costs per unit of output generally decreasing with increasing scale.

Economic Profit

The difference between total revenue and total costs, including both explicit and implicit costs, measuring the performance exceeding opportunity costs.

Short-Run Equilibrium

The condition in which supply and demand are equal at a particular price level, within a short time frame, before all variables have fully adjusted.

Profit-Maximizing

The process or goal of a firm to adjust its production and sale strategies to achieve the highest possible profits.