The more risky future options or alternatives are a) the less rational people will necessarily be. b) the more future values must be discounted to obtain their present values. c) the greater their present values. d) the greater their net values in the future.
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The more risky future options or alternatives are
a) the less rational people will necessarily be.
b) the more
c) the greater their present values.
d) the greater their net values in the future.
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- d. Use expected utility to make a recommended decision. e. Should the decision maker feel comfortable with the final decision recommended by the analysis?PATTS is deciding which of the two investments to take. Option A, total costs = $75,000,000 and the expected benefits = $95,000,000. Option B, total costs = $36,000,000 and the expected benefits = $60,000,000. Which option PATTS should choose?Give proper explanation of the correct option and proper explanation of the incorrect options
- A lottery system has balls numbered 1 to 65 and randomly selects 6 of the lottery balls. There is only one prize of $ 10,000,000.00 which is awarded only it a lottery player selects the correct set of 6 lottery balls. a) If a lottery ticket costs $ 5.00, what is a lottery player's expected value? b) How much would the lottery prize have to be worth if it was to be a fair game? (Note: Include dollar signs in your answer)a. If the decision maker knows nothing about the probabilities of the fourstates of nature, what is the recommended decision using:i. the optimistic approachii. the conservative approachiii. the minimax regret approachiv. the Laplace methodWho is most risk-averse? a-an individual with slightly diminishing marginal utility. b-all individuals are equally risk-averse. c-an individual with rapidly diminishing marginal utility. d-an individual who does not experience diminishing marginal utility.
- What techniques are used to solve decision-making problems under uncertainty? Which technique results in an optimistic decision? Which technique results in a pessimistic decision?b) What is sensitivity analysis? Why should sensitivity analysis consider all possible consequencesEconomics Shawn's consumption is subject to risk. With probability 0.75 he will enjoy 10000 in consumption, but with probability 0.25 he will have only 3600. His utility function for consumption is given by v(c) = Vc. -What is the expected value of Shawn's consumption? -What is his expected utility? -What is his certainty equivalent of having 10000 with probability 0.75 and 3600 with probability 0.25?What are the usual steps in Benefit – Cost Analysis? a) Try to figure out what result or conclusion you want, and then set the assumptions to make sure the analysis produces that result. b) Identify the potential benefits and figure out a way to valuate them. c) Identify the potential costs and valuate them. d) Dismiss those benefits and costs to which you cannot assign a numerical value e) Estimate the probability of each of the benefits and costs actually materializing or occurring. f) Mulltiply the value of costs and benefits by their respective probabilities to arrive at the "mathematical expectation" or "mathematically expected" value. g) For costs and benefits expected in the future, especially distant future, discount their value to the present time, using a "reasonable" discounting rate.
- Whether a certain criterion is determinant or not is independent of the situation in which a product is consumed. True False In the context of disposing of consumer refuse, recycling cuts down on garbage while providing raw materials for other new products. True False Which of the following is a fundamental emotion evoked by positive, anticipatory appraisals that signal uncertainty about a positive outcome? a. Hope b. Confusion c. Surprise d. Pride Which of the following best describes chronic, repetitive purchasing behaviors that are in response to negative events or feelings? a. Addictive consumption b. Impulsive purchasing c. Window shopping d. Compulsive buying Retaliatory revenge is when a consumer yells insults and makes a public scene in an effort to harm the business. True FalseQUESTION 2 Tommy is 20 years old. If Tommy quits smoking today, he is expected to gain 10 years in life expectancy through reduced risk of lung cancer. However, that benefit is 50 years away, while the cost of quitting is experienced now. Tommy is quite impatient with a discount rate of 10%. Assuming Tommy places a disutility value of $10,000 on quitting smoking, conduct a cost-benefit analysis to determine whether quitting smoking is worth it to Tommy. Assume 1 year of healthy life is worth $100,000. The net present value of the benefits of quitting is $ benefit (benefit minus cost) is therefore s calculations, both intermediate and final, to whole numbers.) QUESTION 3 The net present value of the cost of quitting is $ .so Tommy does not The net (does/does not) find it worthwhile to quit. (Round allPlease give handwritten solution!!