Suppose That John Hands You a Coin to Flip and Wants

question 75

Essay

Suppose that John hands you a coin to flip and wants to bet on the outcome. Now, John has tried this sort of thing before, and you suspect that the coin is "rigged." You decide to test this hypothesis by taking a sample. You flip the coin twice, and it is heads both times. You say, "Aha, I knew it was rigged!" John replies, "Don't be silly. Any coin can come up heads twice in a row."
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The following scheme was devised by mathematician John von Neumann to allow fair results even if the coin is somewhat biased. The coin is flipped twice. If it comes up heads both times or tails both times, it is flipped twice again. If it comes up heads-tails, this will decide the outcome in favor of the first party; and if it comes up tails-heads, this will decide the outcome in favor of the second party. Show that this will result in a fair toss even if the coins are biased.

Realize how changes in market conditions (e.g., wage rates, product prices, demand for labor) affect labor hiring and marginal revenue product.

Understand the role and impact of labor in production within different markets.

Identify and explain the concept of marginal revenue product (MRP) and its significance to employment decisions.

Analyze the effects of changes in wages and labor supply on employment levels and wage rates.

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Definitions:

Binding Contract

An agreement between parties that is legally enforceable by law, containing all essential elements of a contract.

Unilateral Contract

A contract in which only one party makes a promise or undertakes a performance, while the other party accepts by performing the specified act.

Oral Acceptance

The verbal agreement to the terms of a contract, which in some cases can be legally binding, depending on the nature of the contract and jurisdiction.

Battle Of The Forms

A situation in contract law where two parties form an agreement based on differing standard terms and conditions, typically through the exchange of forms like purchase orders and invoices.