Suppose 1.250 raffle tickets are being sold for $5 each. One ticket will be chosen to receive a cash prize of $2,500, and three tickets will be chosen to receive cash prizes of $500. Let x be the amount of money won/lost by purchasing one raffle ticket. Find the expected value for Round your answer to the nearest penny. Do not include as sign in your answer. Your answer may be positive or negative)

Suppose 1.250 raffle tickets are being sold for $5 each. One ticket will be chosen to receive a cash prize of $2,500, and three tickets will be chosen to receive cash prizes of $500. Let x be the amount of money won/lost by purchasing one raffle ticket. Find the expected value for Round your answer to the nearest penny. Do not include as sign in your answer. Your answer may be positive or negative)

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter3: Preferences And Utility

Section: Chapter Questions

Problem 3.9P

See similar textbooks

Similar questions

Mr. Dogan has 4000 TL to spend. He considers buying meat whose price is 400 TL per kg. and cheese whose price is 160 TL /kg. Given this a) What condition (equality) leads him to a utility maximization. State the condition numerically and tell clearly what each of the variables mean in that equation b) Now suppose that income of Mr. Dogan and price of meat does not change but price of cheese is down to 130 TL/kg. Do the equality and optimal basket found in a still maximize the utility? If not; what is the new condition for utility maximization (write the condition as a numerical equation defining the variables in the equation)
Roxanne is considering chipping in to pay for some tree trimming in her neighborhood. If the trees are trimmed, everyone's view improves by the same amount. Roxanne's utility function is given by u(x,t)=3x+1200t, where x is the amount of money she has to spend and t is a variable that equals 1 if the trees are trimmed and 0 if they are not. 1st attempt See Hint Suppose Roxanne starts with $8000. Her utility of that amount of money without the trees being trimmed is 24000 (that is, u(8000,0)=24000). Calculate her reservation price for contributing to the tree-trimming project. $
Sanjay won a poker game against his friends. Now he has to choose between $600 (the winnings) and the chance to play a new game. In this new game, Sanjay has a 50% chance of winning nothing and a 50% chance of winning $1000. The following graph presents the utility function of Sanjay with respect to money: 1. By how much money would his winnings need to increase or decrease so that Sanjay isindifferent between the $600 and the new game? At a different table, Juan wins $800 in a blackjack game. Similarly, he has to choose between $800 or the chance to win a new game. In this game, Juan has a 45% chance of winning nothing and a 55% chance of winning $1000. The following graph presents the utility function of Juan with respect to money: 2. By how much money would his winnings need to increase or decrease so that Juan is indifferent between the $800 and the new game? Please enter a positive number for an increase or a negative number for a decrease.
True/False/Uncertain: 1. In taking an exam, Atack, a rational student, allocates his time to the various questions so as to equalize hismarginal point utility per minute on all questions. 2. The marginal utility of food to Zecher depends only on the amount of food (and not on the amount ofhousing) and the marginal utility declines as more food is consumed; likewise for housing. Therefore,both food and housing are normal goods. (Hint: Express the optimality condition for Zecher’s [UMP], MUF/MUH = PF/PH. Notice that PF/PH is fixed. If all of an increase in income is spent on F, can the equality be maintained?)
If Ty's marginal utility for a cup of coffee is 20 and his marginal utility of a donut is 10, then A. they should both be purchased. B. coffee should be his next purchase. C. a donut should be his next purchase. D. price information is also needed to determine what Ty should purchase next.
If you had a vacation budget of $3000 to take vacation(s) this fall, use utility analysis theory to predict which vacation that you would participate in this fall. You need to explain why you would take this vacation instead of another one that you were considering. Assume that you must take the vacation or all life on Earth would perish. I made that last assumption to prevent you from saying that you would just spend it to pay down bills or put it in savings. Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.
Mats, who has reference-dependent preferences over beer and money, goes to the local pub with a friend, but is not planning on drinking any beer or spending any of his 50 Euro in cash. Let his end-of-evening outcomes in pints of beer consumed and cash be c1 and c2, respectively, and let his reference point in pints of beer and cash be r1 and r2, respectively. Then, Mats’ utility is given by v(6c1 − 6r1) + v(c2 − r2), where v(x) = x for x ≥ 0, and v(x) = 1.5x for x < 0. (a) Suppose that the price of beer is pB. Calculate Mats’ utility from drinking one pint of beer at this price. What is Mats’ utility from drinking no beer? And, comparing these two utility values, what is the maximum price pB that Mats would pay for one beer? (b) Suppose that Mats unexpectedly gets a pint of beer as part of a promotion at the pub, and incorporates its consumption into his reference point in beer. [Hint: this means that (r1, r2) = (1, 50).] Suppose that Mats could sell the beer at a price pS.…
‘‘Risk-averse people should only be averse to big gambles with a lot of money at stake. They should jump on any small gamble that is unfair in their favor.’’ Explain why this statement makes sense. Use a utility of income graph like Figure 4.1 to illustrate the statement. For a challenge, demonstrate the statement using a two-state graph like Figure 4.6.
It is October and Sam has won a price of $9000. She has the following two options:• Option A: receiving the entire amount in October;• Option B: receiving the price in three equal installment, that is, receiving $3000 in eachof the following months (October, November, December).Sam decides to distribute her price over time by choosing Option B. Assume that Sam hasconstant marginal utility of money. Prove mathematically that Sam’s preference for Option B cannot be explained by hy-perbolic discounting (the β − δ model). Assume 0 < δ < 1 and 0 < β ≤ 1.
Suppose that a consumer has a choicebetween two goods, X and Y. If the price of X is $2 and the priceof Y is $3, how much of X and Y does the consumer purchaseper period, given an income of $17 per period? Use the followinginformation about marginal utility:Units MUX MUY1 10 52 8 43 2 34 2 25 1 2
Suppose that each week Fiona buys 16 peaches and 4 apples at her local farmer's market. Both kinds of fruit cost $1 each. From this we can infer that: If Fiona is maximizing her utility, then her marginal utility from the 16th peach she buys must be greater than her marginal utility from the 4th apple she buys. Fiona is not maximizing her utility. If Fiona is maximizing her utility, then her marginal utility from the 16th peach she buys must be equal to her marginal utility from the 4th apple she buys. The law of diminishing marginal utility does not hold for Fiona.
Vilfredo has complete and transitive preferences on cars. We know that he prefers a Hyundai Sonata to a Mazda 3, and that he finds a Mazda 3 at least as good as a Honda Civic. Can we conclude that he prefers a Hyundai Sonata to a Honda Civic? Yes No