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Security A will yield a 6% return in one year. Security B will either yield a 3% return or a 9% return in year with equal probability. Which is the better investment based on risk aversion and why?
Consumer Surplus
The economic benefit consumers receive when they pay less for a product or service than what they were willing to pay.
Total Surplus
The total societal benefits from trading a good or service, encapsulated by the combination of consumer surplus and producer surplus in a market.
Average Total Cost
The total cost divided by the quantity produced, denoting the cost per unit of production.
Natural Monopoly
A market structure where a single supplier is most efficient in producing the goods due to high fixed or startup costs, making it unfeasible for new entrants to compete.
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