Which of the Following Games Might a Risk-Averse Person Play

question 104

Multiple Choice

Which of the following games might a risk-averse person play?

• A)a game where she has a 50 percent chance of winning $1 and a 50 percent chance of losing $1
• B)a game where she has a 50 percent chance of winning $100 and a 50 percent chance of losing $100
• C)a game where she has a 60 percent chance of winning $1 and a 40 percent chance of losing $1
• D)a game where she has a 40 percent chance of winning $1 and a 60 percent chance of losing $1

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Definitions:

Creative Destruction

A process where new innovations cause the demise of older industries or technologies, leading to economic growth and development.

Economic Recession

A period of temporary economic decline during which trade and industrial activity are reduced, generally identified by a fall in GDP in two successive quarters.

Automobile Production

is the series of processes involved in manufacturing automobiles, including assembly, painting, and quality control, among others.

Allocative Efficiency

Allocative efficiency occurs when resources are distributed in a way that maximizes the net benefit to society, matching consumer preferences with production.