1.) Adam had two job interviews last week and expects to get job offers from both. Today he got a call from Arec Co offering him an annual salary of $70,000 and they need an answer by the end of the day or they will give the job to someone else. He knows that LAC Inc. will have an offer to him next week. Based on his research, LAC Inc. has a 50% chance of offering $85,000 and a 50% chance of offering him $45,000. Should he take offer from Arec or wait for the offer from LAC Inc.?

a. he should take the offer from Arec because it is a guaranteed salary

b. he should wait for the offer from LAC because it has a higher expected value

c. he should take the offer from Arec because LAC has a lower expected value

d. he should wait for the job from LAC because it potentially has a much higher salary

2.) Extreme poverty, where people live on less than $1.90 per day has been declining over the last several decades.

a. True, extreme poverty is a relative measure of poverty.

b. True, absolute poverty levels have been declining worldwide.

c. False, only moderate poverty has decreased, while extreme poverty has stayed the same.

d. False, extreme poverty has been increasing.

3.) Wage differences can be based on physical or education requirements for a job, number of hours worked, or even discrimination. A compensating wage differential is paid to people __________.

a. who have an undesirable job.

b. working for a labor union.

c. who have graduated college.

d. signaling that they have a low risk premium.