One option in a roulette game is to bet $ 16 on red. ​ (There are 18 red​ compartments, 18 black​ compartments, and two compartments that are neither red nor​ black.) If the ball lands on​ red, you get to keep the $ 16 you paid to play the game and you are awarded $ 16. If the ball lands​ elsewhere, you are awarded nothing and the $ 16 that you bet is collected. Find the expected payback for this roulette game if you bet $16on red.

Mr. John is watching an old game show rerun on television called Let’s Make a Deal in which the contestant chooses a prize behind one of two curtains. One of the curtains will yield a gag prize worth Rs.14,700/-, and the other will give a car worth Rs. 63,600. The game show has placed a subliminal message on the curtain containing the gag prize, which makes the probability of choosing the gag prize equal to 60 percent. What is the expected value of the selection? (a) Rs. 24,260; (b) Rs. 34,260; (c) Rs. 43,620; (d) Rs. 32,620; (e) Rs. 26,420

You get to throw a bean bag at a cutout of Mrs. Reed’s face with holes for the eyes, nose and mouth. You have a 20% chance of throwing it in the eyes or nose. If you do, then you win $5. You have 30% chance of throwing it in the mouth. If you do, then you win $4. You have 50% chance of missing. If you miss, you lose $6. Find the expectation for this game.

The questions in this section contribute to your assignment grade. Stars indicate the difficulty of the questions, as described on Canvas. 2. Mark and Elyse buy a lottery ticket together. They win a promotion that guarantees them free apples for life. The apples can only be delivered to one recipient. Mark decides to buy Elyse out of her share of the win. That is: Mark will receive all the apples (for life) and Elyse will receive cash (once). The deliveries of apples are valued at $1000 per year. The friends consult an actuarial table, and decide that they both can reasonably be expected to live another 50 years. So, Elyse proposes that Mark pays her $25,000 for her half of the windfall. Mark, sensing an opportunity for calculus and for profit, declines her offer. He explains his objection: "If I pay you a dollar now, and get a dollar back 50 years later, that's not a good deal for me." Mark and Elyse agree on a future discounting rate of 10% per year. They calculate it as follows:¹ D…

Read the passage and answer the following question(s). dis ins Homeowner and Renters Insurance: Protect Your Belongings You may be able to save hundreds of dollars a year on homeowners insurance by shopping around. You can also save money with these tips: Consider a higher deductible. Increasing your deductible by just a few hundred dollars can make a big difference in your premium. Ask your insurance agent about discourks. You may be able to get a lower premium if your home has safety features such as dead-bolt locks, smoke detectors, an alarm system, storm shutters or fire retardant roofing material. Persons over 55 years of age or long-term customers may also be offered discounts. OD. Insure your house NOT the land under it. After a disaster, the land is still there. If you don't subtract the value of the land when deciding how much homeowners insurance to buy, you will pay more than you should. Don't wait till vou have lor

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8 A company offers your friend, Lily, an interesting gamble involving giving her the choice of the contents in one of two sealed, identical-looking boxes. One box has $10,000 in cash and the second has nothing inside. There is an equal probability that the chosen box contains cash versus nothing. Lily states that she would not call off the gamble if you offered her a certain $2,999 instead of her choice of box. However, she would be indifferent if $3,000 was offered in place of the risky gamble; and she would definitely take $3,001 to call off the gamble. We would describe Lily as in this instance. I A. Having a risk preference B. Being risk indifferent C. Being risk averse D. Cannot decide G

In a certain state lottery, a lottery ticket costs 2. In terms of the decision to purchase or not to purchase a lottery ticket, suppose that the following payoff table applies: a. A realistic estimate of the chances of winning is 1 in 250,000. Use the expected value approach to recommend a decision. b. If a particular decision maker assigns an indifference probability of 0.000001 to the 0 payoff, would this individual purchase a lottery ticket? Use expected utility to justify your answer.

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Let's try some questions: Fred buys a new truck by paying $15,000 cash and trading in his old truck ($10,000 market value). What is the cash equivalent price of the truck?