A Person Is Trying to Decide If They Should Buy

question 71

Short Answer

A person is trying to decide if they should buy a lottery ticket.The ticket costs $1.00.If the ticket is a winner, the prize would be $10,000.Knowing that winning $10,000 is not a certain outcome (state of nature), the person finds that the probability of winning is 0.0009.Based on this information, the following payoff table can be constructed: What is the expected monetary value of buying the ticket?

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