State the Economic Decision Rule and Apply It to the Following

question 27

Essay

State the economic decision rule and apply it to the following situations:
(a) A personal computer costs about 2 cent per hour to operate. Every time it is turned on and off, there is a .00005 probability that the computer will fail, costing $700 to repair. Is it worthwhile to turn off your computer?
(b) Should you try out for the soccer or the baseball team?
(c) The date to withdraw from a course and get the $300 refund has passed. With 30 more classes left in the semester, should you drop the course?
(d) Your employer has offered you a 20% raise. Do you work more hours?

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Definitions:

Regression Line

A line that best fits a set of data points in linear regression analysis, showing the general direction in which the data tend to go.

Prediction Interval

An estimate of the interval within which future observations will fall, with a certain probability, given what has already been observed.

One-Time Occurrence

An event or happening that takes place once and is not repeated.

API Gravity

A measure of how heavy or light a petroleum liquid is compared to water, used in the oil and gas industry to classify oils.