Suppose Someone Offers Max the Following Gamble: with Probability 0

question 61

Multiple Choice

Suppose someone offers Max the following gamble: with probability 0.50 he will win $10 and with probability 0.50 he will lose $8. The expected value of this gamble is:

• A)$5.
• B)$2.
• C)$1.
• D)$0.

---

Definitions:

Production Possibilities Curve

A graphical representation illustrating the maximum quantity of two goods that can be produced within a given period under the conditions of a fixed amount of resources and technology.

Infrastructure

The fundamental facilities and systems serving a country, city, or area, including transportation and communication systems, power plants, and schools.

Unemployment Rate

The proportion of the working sector that lacks employment but is in the hunt for jobs.

Technology

The application of scientific knowledge for practical purposes, especially in industry and the development of innovations.