Using Scenario 2 what would be the number of points that the testing company would have to award to make students indifferent between guessing and not guessing even when the student has eliminated three of the answers if it still wishes to impose a
five point penalty for guessing incorrectly. Would this be any different than awarding one point for correct answers and zero points for wrong answers?
What we need to do is to choose a figure that will make the expected value of guessing in this situation equal to the expected value of skipping the question which of course is zero. Therefore, what we are saying is that X/2 + ½(-5) = 0 . This implies that five points would have to be awarded for correct answers as well.
You might also like to view...
In the Malthusian model, state-mandated population control policies are likely to
A) decrease the equilibrium size of the population and increase the equilibrium level of consumption per worker. B) decrease the equilibrium size of the population and have no effect on the equilibrium level of consumption per worker. C) have no effect on the equilibrium size of the population and increase the equilibrium level of consumption per worker. D) have no effect on either the equilibrium size of the population or the equilibrium level of consumption per worker.
Representative democracy works best _____
a. to allocate resources when constitutional rules limit the scope of collective action b. to equalize income when constitutional rules mandate a simple majority rule for all collective decision-making c. with a strong executive branch d. external costs of collective decision-making are extremely high
The period of declining growth in real GDP, between the peak of the business cycle and the trough, is called the: a. contractionary phase. b. boom
c. expansionary phase. d. static phase.
Explain why using leverage to purchase risky securities is so popular