A Person Is Trying to Decide If He or She

question 9

Multiple Choice

A person is trying to decide if he or she should buy a lottery ticket. The ticket costs $2.00. If the ticket is a winner,the prize would be $1,000. Knowing that winning $1,000 is not a certain outcome (state of nature) ,the person finds that the probability of winning is 0.001. Based on this information,the following payoff table can be constructed: Based on the expected monetary value of buying a ticket,what is the best decision?

• A)Buy
• B)Don't buy
• C)Lose
• D)Win

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Definitions:

Incremental

Describes a process of making changes or improvements in small, gradual steps rather than large, significant leaps.

Entity

Something that exists as a particular and discrete unit, often referred to in philosophy, law, and technology.

Internal

Existing or situated within the confines of an object, individual, or group, often referring to inner qualities or operations.

External

Originating from or existing outside oneself or the subject being considered, often influencing it from the outside.