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. If Jack only cares about expected value, and not risk, he should decide to play a game if:

A. the expected value of the payoff is higher than the price to play the game.
B. the expected value of the payoff is lower than the price to play the game.
C. the expected value of the payoff is higher than the expected value of the payoff in the other game.
D. the expected value of the payoff is double the price to play the game.


A. the expected value of the payoff is higher than the price to play the game.

Economics

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Economics

In order for education to be effective as a signal of worker productivity it must be

A. easy for everyone to get a college degree. B. costly for less productive workers to imitate. C. that the employee has taken classes in economics. D. none of the above make education an effective signal.

Economics

Suppose the banking system currently has 300 billion in reserves that the reserve requirement is 10%, and that $3 billion of the reserves are excess reserves that will not be lent out. What is the value of deposits?

A. $3300 billion B. $2970 billion C. $2673 billion

Economics

Price floors

A) provide free market incentives for producers. B) create surpluses by setting the price above equilibrium. C) create shortages by setting the price above equilibrium. D) are used by advocates of the free market.

Economics