Hello there, I'm a first year student studying economics and I was wondering if someone could help me with these questions confirming if they are true, false or not sure with a little explanation/diagram. Thank you very much.
1. A lottery charges ₤10 for a ticket and pays a prize of ₤100 on one in ten of the
tickets (where the winning tickets are selected at random). A risk-averse
individual will not buy a ticket.
2.Adverse selection occurs when an individual takes greater risks if she is
covered by insurance.
3.If a firm in the long run sets its Marginal Rate of Technical Substitution equal
to the ratio of factor prices then it must be maximising its profit.
Thanks