Pirates Have Been Intensely Attacking Ships Off the Shore of Somalia

question 207

Multiple Choice

Pirates have been intensely attacking ships off the shore of Somalia this year. Boat owners have reportedly coughed up more than $30 million in ransom and insurance premiums have shot up. The pirate activity means that the expected utility of wealth of risk averse boat owners who do not have insurance and sail near Somalia is ________.

• A) increasing
• B) decreasing
• C) staying the same
• D) not able to be determined without knowing the extent of risk aversion

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Definitions:

Specializing Exclusively

Involves focusing production or economic activities on a single area or product to maximize efficiency and expertise.

Recession

A momentary economic deflationary period, seen in reduced levels of trade and manufacturing, commonly characterized by a GDP drop for two sequential quarters.

Efficiently

Achieving maximum productivity with minimum wasted effort or expense, often related to the optimal use of resources.

Economic Growth

An increase in the production of economic goods and services, compared from one period of time to another. It can be measured in nominal or real terms, the latter of which is adjusted for inflation.