6. A tapaito is ans example which tpe of woo (a) Private sood. (b) Artificially

Question

6. A tapaito is ans example which tpe of woo (a) Private sood. (b) Artificially scarce good. (e) Common rsource (d) Public good he study of. nnknowns while uncertainty includ" the study of (a) known: known (b)kBown; unknom (c) unknown; known (d) unknown; unknown 8. Which of the following is consistent with risk aversion? (a) Preferring $50 for sure over a (fair) coln which pays $100 for lends and $0 for tails (b) Choosing the bets on red and black/yellow in Ellsberg's single-urn experiment (c) Having a Bernoulli function (a) (d) Noue of the al (e) Both (a) and (c). 9. Which of the following is consistent with ambiguity aversion? (a) Preferring $50 for sure over a (fair) coin which pays $100 for heads and S0 for tails. (b) Choosing the bets on black and black/yellow in Ellsberg's single-urn experiment. (c) Having a Bernoulli finctin u(z) = VE. (d) None of the above. (e) Both (a) and (c). 10. Which of the following intertemporal choices demonstrate constant impatience? (a) Preferring $100 today to $110 in a week and preferring $100 in 52 weeks to $110 in 33 weeks. (b) Preferring $110 next week to $100 today and preferring $100 in 52 weeks to $110 in 53 weeks. (e) Preferring SI110 next week to $100 today aud preferring $110 in 53 weeks to $100 in 52 weeks. (d) Preferring S100 today to $110 in a week and preferring $110 in 53 weeks to $100 in 52 weeks. (e) Both (a) and (c).

Explanation / Answer

6) Taquitos is a private good as it is both excludable and rivalrous as consumption of ot by one person will not allow it to be consumed by anyone else.

Hence correct answer is (a)

7) Direct Definitions, Risk involves the study of KNOWN unknowns while uncertainity involves the study of UNKNOWN unknowns

Hence correct option is (b)

8) We know a risk-averse person is one who tries to avoid risk as much as possible and is not risk loving at all.

This behaviour is in line with a person who has utility function given in C and the characterstic that he prefers a sure amount even if the expected win is same

Hence correct option is (e)

9) We know, ambiguity aversion is when a person prefers known risks over unknown risks. Such a behaviour is exhibited in C where he knows the distribution of wealth in advance.

Hence correct option is (c)

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