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Assignment on Microeconomics PDF

Added on - 18 Nov 2021

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Microeconomics
TABLE OF CONTENTS
Part I...........................................................................................................................................3
1..............................................................................................................................................3
2..............................................................................................................................................3
3..............................................................................................................................................3
4..............................................................................................................................................3
5..............................................................................................................................................3
Part II..........................................................................................................................................4
6..............................................................................................................................................4
7..............................................................................................................................................4
References..................................................................................................................................6
PART I
1
This statement is uncertain, as investment decision is not merely based on return provided by
security as risk is equally important for investors (İmrohoroğlu and Tüzel, 2014). Therefore,
investment option with highest expected return will not always be selected as not all investors
are risk averse.
2
True. Sum of all probabilities of possible events in mathematics or statistics is considered to
be one (Dudley, 2018).
3
False. A risk averse person always aim to generate high return by taking risk on the
investment. Further, gambling is highly risk associated and tend to provide high returns in
contrast to risk taken by person (Deck, Lee and Reyes, 2014).
4
The provided statement is true as in uncertain situation it seem intuitive for individuals to
maximize their expected utility as it is directly associated with their level of satisfaction
(Diamond and Rothschild, 2014).
5
Saving by taking risk
$100/60 minutes*20minutes
=$33.33
Probability of being caught 1/10
There probable possibility of fine:
=1/10*50(Value of fine)
$5
No statement is not true as this fine is not sufficient to deter person from double parking as
their earning capacity is higher than probability of imposition of fine.
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