How Can a Sure Loss Be Presented in a Less

question 20

Multiple Choice

How can a sure loss be presented in a less unattractive way?

• A)Framing the loss in pseudocertain terms.
• B)Framing the sure loss in probability terms,having a 100% probability.
• C)Emphasizing the low degree of risk.
• D)None of the above.

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Definitions:

MSC

The marginal social cost of producing one additional unit of a good or service, which includes both the private cost and any external costs to society.

MC

Marginal cost; the cost incurred by producing one additional unit of a product.

External Cost

Costs that are not borne by the parties involved in an economic transaction but are suffered by other members of society.

Free-Rider Problem

A situation where individuals consume more than their fair share of a public resource, or shoulder less than a fair share of the costs of its production, without contributing to the resource's provision.