Set 5: Command of Evidence (Intermediate)

Explanation

Answer: C

PASSAGE

Prospect theory shows people fear losses more than they value equivalent gains. Losing $100 feels worse than gaining $100 feels good.

What does prospect theory predict?

A. People are indifferent to gains and losses.

B. Loss aversion: losses hurt more than gains please.

C. People always maximize profit.✓ Correct

D. Emotions play no role in decisions.

Detailed Explanation

'Fear losses more than they value equivalent gains. '

Why others are wrong:

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