Tim Is Offered Two Gambles

question 36

Multiple Choice

Tim is offered two gambles.With gamble A,he either gains $2 or loses $1 with a 50 percent probability.With gamble B,he either gains $3 or loses $2 with a 50 percent probability.Tim prefers gamble B to gamble A.What can we conclude?

• A) Tim is risk loving.
• B) Tim is risk neutral.
• C) Tim is risk averse.
• D) Insufficient information to determine.

---

Definitions:

Union Workers

Employees who are members of a labor union, which negotiates wages, working conditions, and other benefits on their behalf.

Wage Advantage

The relative benefit or superior compensation an employee receives, making a position more attractive compared to others.

Minimum Wage

The lowest hourly, daily, or monthly remuneration that employers are legally allowed to pay to workers.

Income-Maintenance Programs

Governmental schemes designed to ensure individuals have a minimum income level through benefits or transfers, often to support those unemployed or in poverty.