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. Jack decides to play the first game, and Kate decides to play the second game as described in the scenario. The expected value of the payoff:
A. is lower for Jack than for Kate.
B. is the same in both games, because there's only one red marble.
C. is higher for Jack than for Kate.
D. is higher in the second game because half the marbles entail a payback of at least what she pays to play the game.
Answer: C
You might also like to view...
The Haig-Simons definition of income
A. is measured over a given time. B. measures an individual's power to consume. C. is a net change measure. D. all of these answer options are correct.
The usual response of the banking system to new government regulations is
A) evasion through whatever means are necessary. B) strict compliance. C) an attempt to circumvent the regulations through financial innovation. D) bankruptcy.
The concept of poverty is culturally determined, and hence people are defined as “poor” in relation to others.
Answer the following statement true (T) or false (F)
The lemons problem is a situation of
A. a natural monopoly. B. perfect competition. C. price discrimination. D. asymmetric information.