Someone who values a lottery at more than the expected value is
a. a risk lover
b. risk neutral
c. risk averse
d. one who tends to play lots of lotteries
QUESTION 2A natural monopoly:
a. is a monopoly in the production of raw materials.
b. occurs when one firm can supply the entire market more cheaply than can a number of firms.
c. is one result of a patent.
d. necessarily involves inefficient pricing.
QUESTION 3In determining the optimal capital budget, one should choose those project's whose ____ exceeds the firm's ____ cost of capital.
a. internal rate of return, average
b. internal rate of return, marginal
c. internal rate of return, historic
d. average rate of return, marginal
e. none of the above
QUESTION 4Someone who values a lottery at less than the expected value is
a. a risk lover
b. risk neutral
c. risk averse
d. one who tends to play lots of lotteries
QUESTION 5Which of the following is not a technical barrier to entry in a monopolized market?
a. A patent
b. Decreasing average cost
c. A low cost method of production known only by monopolists
d. Increasing returns to scale
QUESTION 6The relationship between NPV and IRR is such that :
a. both approaches always provide the same ranking of alternatives
b. the IRR of a project is equal to the firm's cost of capital when the NPV of a project is 0
c. if the NPV of a project is negative, then the IRR must be greater than the cost of capital
d. all of the above
e. none of the above
QUESTION 7An individual who is a risk lover
a. values a lottery at more than its expected value
b. values a lottery at exactly its expected value
c. values a lottery at less than its expected value
d. tends to play lots of lotteries
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