(1) single choice Q 1.Which of the following statements is true of creative destruction? A. Creative destruction is generally bad for an economy. B. Creative destruction is encouraged in economies with extractive institutions. C. Creative destruction creates losses for some economic agents and benefits for others. D. Creative destruction is a phenomenon that was mostly prevalent before the year 1800. Q 2.Which of the following statements is true? A. Future rewards are worth less than current rewards of the same value. B. Current rewards are worth less than future rewards of the same value. C. Risky options are always preferred to riskless options. D. Riskless options always have higher expected payoffs than risky options. Q 3.Scenario: Three investment options are available in a market. All three options provide the same expected rate of return but have different levels of risk associated with them. Investing in Option A is the riskiest, while investing in Option C is the safest. Option B has a moderate level of risk associated with it. Refer to the scenario above. Which investment option will a risk-neutral individual choose? A. He will choose to invest in Option A. B. He will choose to invest in Option B. C. He will choose to invest in Option C. D. He will be indifferent in investing in any of the three options.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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(1) single choice Q 1.Which of the following statements is true of creative destruction? A. Creative destruction is generally bad for an economy. B. Creative destruction is encouraged in economies with extractive institutions. C. Creative destruction creates losses for some economic agents and benefits for others. D. Creative destruction is a phenomenon that was mostly prevalent before the year 1800. Q 2.Which of the following statements is true? A. Future rewards are worth less than current rewards of the same value. B. Current rewards are worth less than future rewards of the same value. C. Risky options are always preferred to riskless options. D. Riskless options always have higher expected payoffs than risky options. Q 3.Scenario: Three investment options are available in a market. All three options provide the same expected rate of return but have different levels of risk associated with them. Investing in Option A is the riskiest, while investing in Option C is the safest. Option B has a moderate level of risk associated with it. Refer to the scenario above. Which investment option will a risk-neutral individual choose? A. He will choose to invest in Option A. B. He will choose to invest in Option B. C. He will choose to invest in Option C. D. He will be indifferent in investing in any of the three options.

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