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

question 35

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 $40, then searching for another apartment is a gamble with an expected value of:

• A)-$10.
• B)$0.
• C)$10.
• D)$20.

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Definitions:

Positive Self-Talk

The practice of making affirmative or encouraging statements to oneself to foster a positive mindset.

Positive Visual Imagery

The practice of using one's imagination to visualize specific behaviors or outcomes in a positive light, often used in mental preparation and stress reduction techniques.

Mental Rehearsal

A cognitive process where individuals visualize themselves successfully performing a task before actually doing it.

Building Your Self-Esteem

The process of developing and enhancing one's own sense of self-worth and confidence.