Alan is offered a gamble. Heads he wins $100, tails he wins $20 . If the game costs $60, would he play?
a. Yes he would play since the expected value is equal to the price of the play
b. Yes he would play since the expected value of the play is higher than the price of the play
c. No he would not play since the price of the play is higher than the expected value
d. No he would not play since this is a fair bet and he is not being offered any risk premium
d
You might also like to view...
A firm uses two inputs, A and B. At its optimal choice of input proportions,
A. MRP of A = MRP of B. B. MRPA/PA= MRPB/PB. C. MPP of A = MPP of B. D. All of the responses are correct.
With which choice are you more likely to avoid Bid-rigging cartels?
a. Holding English auctions b. Holding sealed-bid auctions c. Holding oral auctions d. All of the above
Which of the following is a main limitation of GDP?
A. GDP figures are grossly inaccurate due to sampling errors. B. The real definition of what is and is not included in GDP is unclear. C. GDP includes some products, which by their very nature are bad products, such as military weapons. D. GDP is not a good measure of a nation's overall welfare.
A open market purchase of government securities by the Fed will cause which of the following?
A. an increase in the equilibrium quantity of reserves B. an increase in the amount of excess reserves that banks will hold initially C. a reduction in the federal funds rate D. all of these