A Person Who Strongly Wishes to Avoid Risk Would Pick

question 48

Multiple Choice

A person who strongly wishes to avoid risk would pick which of the following choices?

• A) a 50% chance of winning $750 or a 50% chance of winning $0
• B) a 100% of getting $375
• C) a 50% chance of getting $750, 25% chance of getting &1,500 and a 25% chance of losing $1,500
• D) All of the above are equal to a person who wishes to avoid risk.

---

Definitions:

Economic Profits

Profits exceeding the opportunity costs of a company; considered an indicator of efficiency and entrepreneurship.

Average Total Cost

The total cost of production divided by the total quantity of goods produced, representing the cost per unit.

Average Variable Cost

The cost of labor and materials divided by the quantity of output produced, reflecting costs that change with the level of output.

Average Total Cost

The total cost of production divided by the quantity of output produced; it includes both fixed and variable costs.