If a plaintiff believes there is a 30 percent chance they will win $200,000, a 40 percent chance they will win 100,000, and a 30 percent chance they will win nothing (zero), and the litigation cost is $50,000, what is the expected value of the litigation for the plaintiff?
A) $50,000
B) $100,000
C) $60,000
D) $125,000
A) $50,000
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If the Fed wants to fight inflation, it will ________ the federal funds rate in order to ________
A) raise; decrease aggregate supply B) raise; increase aggregate supply C) raise; decrease aggregate demand D) lower; decrease aggregate demand E) lower; increase aggregate supply
Which of the following is an example of implicit collusion?
A) price leadership B) a retaliation strategy C) a second-price auction D) product differentiation
The choice between hawk and dove positions depends on
a. the extent of cyclical unemployment at the time of the decision b. relative importance of short-run and long-run monetary considerations c. cooperation between Congress and the monetary authorities d. the frequency of negative supply shocks e. the Fed's relative concern for price and employment stability
Substitution bias
a. is one factor that causes the Consumer Price Index to underestimate the inflation rate b. is caused by the poor quality of many products c. is one of the primary causes of inflation d. involves consumer behavior that helps explain why the Consumer Price Index overestimates the inflation rate e. suggests most economists substitute other price indices for the flawed Consumer Price Index