Asked by Adeel Humayun on Jun 30, 2024
Verified
Use the following statements to answer this question: I. Subjective probabilities are based on individual perceptions about the relative likelihood of an event.
II) To be useful in microeconomic analysis, all interested parties should agree on the values of the relevant subjective probabilities for a particular problem.
A) I and II are true.
B) I is true and II is false.
C) II is true and I is false.
D) I and II are false.
Subjective Probabilities
Individual assessments or beliefs about the likelihood of future events, based on personal judgment rather than objective data.
Microeconomic Analysis
The examination of the economic behavior of individuals, households, and firms, focusing on market mechanisms and the determination of prices and quantities in specific markets.
- Understand the importance of subjective probabilities in making decisions.
Verified Answer
WI
Wanaag Islamic ChannelJul 06, 2024
Final Answer :
B
Explanation :
Statement I is true as subjective probabilities are based on individual perceptions. However, statement II is false as it is not necessary for all interested parties to agree on the values of subjective probabilities for a particular problem. In fact, different parties may have different perceptions and subjective probabilities, which can be analyzed and compared to determine the best course of action. Therefore, B is the correct choice.
Learning Objectives
- Understand the importance of subjective probabilities in making decisions.
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