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- Ex 8. An airline's data indicate that 50 percent of people who begin the online process of booking a flight never complete the process and pay for the flight. To reduce this percentage, the airline is considering changing its website so that the entire booking process, including flight and seat selection and payment, can be done on two simple pages rather than the current four pages. A random sample of 300 customers who begin the booking process are exposed to the new system, and 117 of them do not complete the process. a. Formulate the null and alternative hypotheses needed to attempt to provide evidence that the new system has reduced the noncompletion percentage. b. Use critical values to perform the hypothesis test by setting α equal to .10, .05, .01, and .0015.q1Consider the following compound lottery, described in words: "The probability that the price of copper increases tomorrow is objectively determined to be 0.5. If it increases, then tomorrow I will flip a coin to determine a monetary payout that you will receive: if the flip is Heads, you win $100, while if it is Tails, you win $50. If it does not increase, then I will roll a 10-sided die (assume each side is equally likely to be rolled). If the die roll is a 4 or lower, you will win $100. If it is a 5, then you will win $200, and if it is a 6 or greater, you will win $50." Fill in the blanks below for the reduced lottery that corresponds to this compound lottery (write in decimals). R= ( , $50; , $100; , $200)
- (Ch 6) True or False? In a hotel, 50 percent of the guests pay by American Express credit card. Suppose the first X-1 guests use NON-American Express credit cards while the Xth guest is the first to use an American Express. Then X follows a geometric distribution. And P(X=2)=0.25.Suppose a country has 100 million inhabitants. The population can be divided into the employed, the unemployed, and the persons who are out of the labor force (OLF). In any given year, the transition probabilities among the various categories are given by Moving into: Employed Unemployed OLF Moving from: Employed Unemployed OLF 0.94 0.20 0.05 0.02 0.65 0.03 0.04 0.15 0.92 These transition probabilities are interpreted as follows. In any given year, 2 percent of the workers who are employed become unemployed; 20 percent of the workers who are unemployed find jobs, and so on. What will be the steady-state unemployment rate?Natasha has utility function u(I) = (10*I)0.5, where I is her annual income (in thousands). (a) Is she a risk loving, risk averse or risk neutral individual? She is [risk loving, risk adverse, risk neutral] , as her utility function is [concave, convex, linear] (b) Suppose that she is currently earning an income of $40,000 (I = 40) and can earn that income next year with certainty. She is offered a chance to take a new job that offers a 0.6 probability of earning $44,000 and a 0.4 probability of earning $33,000. She should [take, not take] the new job because her expected utility of (approximately) [18.27,19.82,20,20.95,21.14] is [greater than, less than, equal to] her current utility of [18.27,19.85,20,20.95,21.14] .
- Prospect Z = ($7 , 0.25 ; $19 , 0.50 ; $26 , 0.25) If Anna's utility of wealth function is given by u(x)=x, what is the value of CE(Z) for Anna? (In other words, what is Anna's certainty equivalent for prospect Z?) (Note: The answer may not be a whole number; please round to the nearest hundredth) (Note: The numbers may change between questions, so read carefully)Let W0 represents an individual’s current wealth and U(W) is this individual’s von Neumann-Morgenstern utility index (or utility function) that reflects how s/he feels about various levels of wealth. Assume this individual marginal utility of wealth decreases a wealth increases. Which of the following statements is true? a. This individual will prefer to keep his or her current wealth rather than taking a fair gamble. b. For this individual, a 50-50 chance of winning or losing c dollars yields less expected utility than does refusing the bet. c. This individual is said to be risk averse. d. All of the above.Gary likes to gamble. Donna offers to bet him $31 on the outcome of a boat race. If Gary’s boat wins, Donna would give him $31. If Gary’s boat does not win, Gary would give her $31. Gary’s utility function is p1x^21+p2x^22, where p1 and p2 are the probabilities of events 1 and 2 and where x1 and x2 are his wealth if events 1 and 2 occur respectively. Gary’s total wealth is currently only $80 and he believes that the probability that he will win the race is 0.3. Which of the following is correct? (please submit the number corresponding to the correct answer). Taking the bet would reduce his expected utility. Taking the bet would leave his expected utility unchanged. Taking the bet would increase his expected utility. There is not enough information to determine whether taking the bet would increase or decrease his expected utility. The information given in the problem is self-contradictory.
- You are the mayor of a small town with 2000 residents. The head of your economic development agency recently conducted a survey in which the 2000 residents said that a public concert in the centre of town would be worth $20 to each of them. Since it costs only $5000 to hold the concert, you organized and held the concert, which everyone in town enjoyed. But when you asked for donations to pay for the concert, you only collected $30 in total. What do you know? Question 88 options: The concert was an example of the Tragedy of the Commons. From the standpoint of total costs and benefits, the cost of the concert certainly exceeded the benefit. The survey certainly overstated how much the concert was worth to each resident. Residents of the town were probably free riders.When a famous painting becomes available for sale, it is often known which museum or collector will be the likely winner. Yet, the auctioneer actively woos representatives of other museums that have no chance of winning to attend anyway. Suppose a piece of art has recently become available for sale and will be auctioned off to the highest bidder, with the winner paying an amount equal to the second highest bid. Assume that most collectors know that Valerie places a value of $15,000 on the art piece and that she values this art piece more than any other collector. Suppose that if no one else shows up, Valerie simply bids $15,000/2=$7,500 and wins the piece of art. The expected price paid by Valerie, with no other bidders present, is $________.. Suppose the owner of the artwork manages to recruit another bidder, Antonio, to the auction. Antonio is known to value the art piece at $12,000. The expected price paid by Valerie, given the presence of the second bidder Antonio, is $_______. .Consider a class with 80 enrolled students. None of the students were ill at the beginning of the school year. On August 30th, 10 students reported having a common cold. All continued to be ill on September 1st, but all 10 recovered within 3 days. On September 15th, 5 more students had a cold. All of these students continued to be ill on September 16th, but all recovered 5 days later. In this example, assume that a person cannot have a cold more than once.calculate the cumulative incidence of the common cold in the class during the month of september