Suppose That,in an Experimental Setting,100 Students Are Asked to Choose

question 2

Multiple Choice

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 $5,100 with a 70% probability and $200 with a 30% probability.
Gamble B: The student will receive $5,100 with a 50% probability,$200 with a 25% probability,and $0 (nothing) with a 25% probability.
What is the expected value of Gamble B?

• A) EV = 0.7 × ($5,100) + 0.3 × ($200)
• B) EV = 0.5 × ($5,100) + 0.25 × ($100) + 0.25 × ($25)
• C) EV = 0.5 × ($5,100) + 0.25 × ($200) + 0.25 × ($25)
• D) EV = 0.5 × ($5,100) + 0.25 × ($200) + 0.25 × ($0)
• E) EV = 0.5 × ($2,600) + 0.25 × ($2,600) + 0.25 × ($0)

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Definitions:

Healthier Environments

Conditions or settings that promote well-being and prevent disease among the population by managing environmental risk factors.

Paul Ehrlich

A scientist known for his work in the fields of immunology and population control.

Julian Simon

An American economist known for his work on population, natural resources, and immigration, emphasizing that human ingenuity can solve many perceived problems.

Resource Prices

The costs associated with the factors of production, including land, labor, and capital.