Question

1. What term do economists use to describe variability or randomness that cannot be accurately quantified?

a) Uncertainty

b) Instability

c) Ambiguity

d) Risk

e) Indifference

2. Suppose there is a 30% chance that an oil spill will occur in an area and the economic damage of the potential spill is $1 million. What is the expected value associated with the spill?

a) $30,000

b) $3,000

c) $1,000,000

d) $3,000,000

e) $300,000

Answer 1