Alex, Who Is Risk-Neutral, Is Looking for a One-Bedroom Apartment

question 79

Multiple Choice

Alex, who is risk-neutral, is looking for a one-bedroom apartment to rent for the month of August while he's on vacation in Seattle. All of the one-bedroom apartments in the neighborhood where he wants to stay are of equal quality, but 70 percent rent for $700 per month, 20 percent rent for $600 per month, and 10 percent rent for $500 per month. The first apartment Alex finds rents for $700 per month. If the cost to Alex of searching for an apartment is $30, then searching for another apartment is a gamble with an expected value of:

• A)$0.
• B)$10.
• C)$20.
• D)$40.

---

Definitions:

Body Mass Index

Body Mass Index (BMI) is a numerical computation that assesses a person's body weight in relation to their height, indicating if an individual has a healthy body weight.

Carbohydrates

Organic compounds composed of carbon, hydrogen, and oxygen, often serving as a major source of energy in the diet.

Set Point

A theory proposing that the body regulates its weight and energy balance around an internally set value, making it difficult to deviate from this weight.

Blood Glucose Levels

The concentration of glucose present in the blood, crucial for energy production and metabolic processes.