fare final review notes

Risk averse individuals are willing to make a fair bet

false

risk premium

the amount that a risk-averse person would pay to avoid taking a risk

Risk Neutral

An individual who is indifferent about taking a fair bet

Risk Preferring

An individual who wants to take a fair bet

Assigning the probability of a temperature below -5 in Guelph on March 3rd using observations from the past 30 years uses 

the historical frequency approach

what is subjective assessment

asking experts

Assigning the probability that the Maple Leafs will win the Stanley Cup this year uses

subjective assessment

The options from which a decision maker chooses a course of action are 

• called the decision alternatives

• under the control of the decision maker

• not the same as the states of nature

states of nature

can describe uncontrollable natural events such as floods or freezing temperatures

For a maximization problem, the conservative approach is often referred to as the

maximin approach

One way to not reduce risk with your decision choices

alter your risk premium

what is the underlying assumption when modeling consumer behaviour ?

the consumer's objective is to maximize utility.

Since utility functions do not exist in any fundamental sense, we cannot construct an algebraic expression that summarizes preferences.

false

For a given price change, the change in the quantity demanded will always be larger when demand is inelastic rather than elastic.

False

The consumer maximizes their satisfaction through their choice of

preference for what goods to buy and how their time is allocated

properties of indifference curves?

indifference curves cannot intersect, indifference curves further from the origin represent higher levels of satisfaction, and indifference curves slope downward

A change in the demand for a good might be caused by

a change in the preferences of consumers or a change in the income of consumers

As income increases, the consumption of a normal good

increases

Increases in income will shift the budget line for two goods

outward parallel to the existing budget line

Which of these sectors is not a major exporter for Canadian agriculture?

dairy
(red meat, oil seed, and grains are major exporters)

Approximately, what percentage of Canada' primary agr production is exported either directly or indirectly?

50%

Which of the following CANNOT reduce the equilibrium quantity sold in a market?

price floor, price ceiling, and quota

In order for supply management to increase net returns to producers,

Demand for the product must be inelastic.

The incidence of a tax falls mainly on consumers if

Demand for the product is relatively inelastic.

The law of demand states that there is

an inverse relationship between a change in the price of a good and the quantity of it demanded

The incidence of a tax falls mainly on consumers if

Demand for the product is relatively inelastic.

In order for supply management to increase net returns to producers,

Demand for the product must be inelastic.

Welfare economics is focused on the delivery of welfare payments to individuals below the poverty line.

false

Government intervention in the market is justified on efficiency grounds if there is market failure.

true

Market failure occurs when

imperfect competition exists, property rights cannot be defined and price information is not available

Market failure is the inability of

some unregulated markets to allocate resources efficiently