A Person Is Trying to Decide If They Should Buy

question 49

Multiple Choice

A person is trying to decide if they 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: What is the expected monetary value of buying the ticket?

• A) +$1.00
• B) -$0.998
• C) +$0.998
• D) -$1.998

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Definitions:

Central

Principal or highly important; this term can relate to main functions, locations, or processes within various fields.

Tertiary

Pertaining to the third order, stage, level, or degree in a sequence.

Trait Theorists

Psychologists who study personality, focusing on the identification and measurement of consistent behavior patterns referred to as traits.

Biological

Pertaining to the processes and phenomena of living organisms or life itself.