Pearson eText Economics -- Instant Access (Pearson+)
13th Edition
ISBN: 9780136879459
Author: Michael Parkin
Publisher: PEARSON+
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Chapter 20, Problem 20APA
To determine
Identify the concept of ‘worrying about mere possibilities and while ignoring probabilities’.
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1.
Farmers Jack and Joe have learned that their respective farms have been struck by an unusual virus.
When Joe goes to the vet, he is told that if nothing is done 200 of his 800 animals will live. The alternative is an experimental drug, if used there is a 25% chance that all animals will live and a 75% chance that none will live.
When Jack goes to the vet, he is told that if nothing is done 600 of his 800 animals will die. His vet also offers an experimental drug and explains that if used there is a 75% chance that all the animals will die and a 25% chance that none will die.
Using the value function from Prospect Theory predict which action Joe and Jack will take.
a) Both Joe and Jack will do nothing
b) Both Joe and Jack opt for the experimental drug
c) Joe will do nothing but Jack will opt for the experimental drug
d) Joe will opt for the experimental drug but Jack will do nothing.
Explain (please also explain how your prediction differs from the prediction of standard expected…
Which of the following is an example of a risk opportunity?
a. CN Tower meteorologists determine there is a 90% chance that a hurricane will sweep through the construction site this week.
b. Construction investors determine that they may pull their funds from the CN Tower construction project.
c. The city of Toronto has determined that there will be a surprise safety regulations audit conducted for the CN Tower.
d. The government of Canada is in discussions to permanently remove COVID travel restrictions.
Does the risk correspond to the dispersion, or uncertainty, impossible outcomes?
Chapter 20 Solutions
Pearson eText Economics -- Instant Access (Pearson+)
Ch. 20.1 - Prob. 1RQCh. 20.1 - Prob. 2RQCh. 20.1 - Prob. 3RQCh. 20.1 - Prob. 4RQCh. 20.2 - Prob. 1RQCh. 20.2 - Prob. 2RQCh. 20.2 - Prob. 3RQCh. 20.2 - Prob. 4RQCh. 20.3 - Prob. 1RQCh. 20.3 - Prob. 2RQ
Ch. 20.3 - Prob. 3RQCh. 20.3 - Prob. 4RQCh. 20.4 - Prob. 1RQCh. 20.4 - Prob. 2RQCh. 20.4 - Prob. 3RQCh. 20 - Prob. 1SPACh. 20 - Prob. 2SPACh. 20 - Prob. 3SPACh. 20 - Prob. 4SPACh. 20 - Prob. 5SPACh. 20 - Prob. 6SPACh. 20 - Prob. 7APACh. 20 - Prob. 8APACh. 20 - Prob. 9APACh. 20 - Prob. 10APACh. 20 - Prob. 11APACh. 20 - Prob. 12APACh. 20 - Prob. 13APACh. 20 - Prob. 14APACh. 20 - Prob. 15APACh. 20 - Prob. 16APACh. 20 - Prob. 17APACh. 20 - Prob. 18APACh. 20 - Prob. 19APACh. 20 - Prob. 20APACh. 20 - Prob. 21APACh. 20 - Prob. 22APACh. 20 - Prob. 23APA
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