An Individual Is on the Game Show "Squeal or No

question 29

Multiple Choice

An individual is on the game show "Squeal or No Squeal" and she has a choice between receiving a certain gain of $100,000 or a 50% chance of winning $200,000 or zero.Which one of the following correctly completes the statement below? If she takes the gamble instead of the certain $100,000 she is acting ____________________.

• A) like a person who is risk neutral
• B) like a person who is risk averse
• C) like a person who is a risk lover
• D) irrationally

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Definitions:

MRC

Marginal Revenue Cost, often used interchangeably with Marginal Cost, refers to the increase in cost associated with producing one additional unit of output.

Profitable

The condition of earning more revenue than the costs incurred, leading to a financial gain or profit for the individual or organization.

Innovation

The first commercially successful introduction of a new product, use of a new method of production, or creation of a new form of business organization.

Invention

The conception of a new product or process combined with the first proof that it will work.