Exhibit 5-16

question 54

Multiple Choice

Exhibit 5-16.According to geologists,the San Francisco Bay Area experiences five earthquakes with a magnitude of 6.5 or greater every 100 years. Refer to Exhibit 5-16.What is the probability that more than two earthquakes with a magnitude of 6.5 or greater will strike the San Francisco Bay Area in the next 40 years?

• A)0.1353
• B)0.2706
• C)0.3233
• D)0.8754

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Definitions:

Aggregate Demand

The aggregate need for all products and services in an economy, measured at a specific price level and during a particular time frame.

Marginal Revenue

The additional income generated from selling one more unit of a product or service.

Demand Curve

A graph showing the relationship between the price of a product and the quantity of the product that consumers are willing and able to purchase at various prices.

Inverse Demand Curve

A graphical representation showing the relationship between the price of a good and the quantity demanded, with price as a function of quantity demanded.