Assume That You Assign the Following Subjective Probabilities for Your

question 66

Multiple Choice

Assume that you assign the following subjective probabilities for your final grade in your econometrics course (the standard GPA scale of 4 = A to 0 = F applies) : $$\begin{array} { | c | c | } \hline \text { Grade } & \text { Robability } \\\hline \text { A } & 0.20 \\\hline \text { B } & 0.50 \\\hline \text { C } & 0.20 \\\hline \text { D } & 0.0 B \\\hline \text { F } & 0.02 \\\hline\end{array}$$ The expected value is:

• A)3.0
• B)3.5
• C)2.78
• D)3.25

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Definitions:

Production Possibilities

A graphical representation showing the maximum quantity of goods and services that an economy can produce when all resources are used efficiently.

Circular-Flow Diagram

A visual model of the economy that shows how dollars flow through markets among households and firms.

Capital

Resources made and used to produce and distribute goods and services; examples include machinery, buildings, and tools.

Firms

Business organizations that produce goods or services, often to make a profit.