Consider the Following Scenario When Answering the Following Questions

question 108

Multiple Choice

Consider the following scenario when answering the following questions:
Suppose that in an experimental setting,100 students are asked to choose between Gamble A and Gamble B,where:
Gamble A: The student will receive $50 with a 70 percent probability and $100 with a 30 percent probability.
Gamble B: The student will receive $50 with a 50 percent probability,$200 with a 25 percent probability,and $0 (nothing) with a 25 percent probability.
-How much money would a risk-neutral student be willing to pay to play this game?

• A) $85
• B) $75
• C) $150
• D) $500
• E) $225

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