Suppose Jack and Kate are at the town fair and are choosing which game to play. The first game has a bag with four marbles in it-1 red marble and 3 blue ones. The player draws one marble from the bag; if it is red, they win $20 and if it is blue, they win $1. The second game has a bag with 10 marbles in it-1 red, 4 blue, and 5 green. The player draws one marble from the bag; if it is red, they win $20; if it is blue, they win $5; and if it is green, they win $1. Both games cost $5 to play. The expected value of the payoff is ________ for the first game and ________ for the second game.
A. $4.50; $5.75
B. $5.00; $4.50
C. $5.75; $5.25
D. $5.75; $4.50
Answer: D
You might also like to view...
When laws and regulations prohibit firms from selling at "prices less than cost,"
A) consumers benefit. B) they are rarely enforced; therefore, competition is allowed to decline in the retailing industry. C) they help maintain competition by eliminating one important advantage of large firms. D) they must define "cost" arbitrarily since no firm has an incentive to sell below cost. E) they serve as our most effective defense against predatory pricing.
Refer to the figure above. Which of the following is likely to happen if a price control below the equilibrium price is imposed?
A) Quantity supplied will exceed quantity demanded. B) Quantity demanded will exceed quantity supplied. C) Consumer surplus will decrease. D) Producer surplus will increase.
If a corporate bond with a face value of $1,000 pays yearly coupon payments of $40, what is the coupon rate?
A) 2.5% B) 4% C) 25% D) 40%
The production possibilities curve shifts outward when
A) the law of increasing additional cost takes hold. B) the economy is producing efficiently. C) we produce more consumption goods over productive investment in equipment. D) there is an increase in resources or technology.