Tommy Spends Most of His Monthly Budget on $3 Video

question 248

Multiple Choice

Tommy spends most of his monthly budget on $3 video game rentals or $6 packets of Pokemon cards.The opportunity cost to Tommy of an extra packet of Pokemon cards is

• A)one video game rental.
• B)two video game rentals.
• C)the cost of the Pokemon cards.
• D)he does not incur an opportunity cost.

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Definitions:

Expected Payoffs

The forecasted return on an investment or decision, taken as the weighted average of all possible outcomes, considering their probabilities.

Mixed Strategy Equilibrium

Mixed Strategy Equilibrium is a concept in game theory where each player in a game randomizes over possible moves according to a specific probability distribution, and no player can benefit by changing their strategy unilaterally.

Pure Strategy Equilibria

A situation in game theory where all players have chosen a strategy and have no incentive to change, leading to a stable outcome.

Maximin Strategy

A decision rule used in game theory and decision making to maximize the minimum possible payoff, focusing on minimizing losses in the worst-case scenario.