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A Person Is Trying to Decide If They Should Buy

question 113

Essay

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. 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? What is the expected monetary value of buying the ticket?


Definitions:

Dolphins

Aquatic mammals known for their intelligence, social nature, and abilities to communicate, play, and perform complex behaviors.

Stress

The body's response to any demand or challenge, which can be triggered by both positive and negative experiences.

Unethical

Acting in ways that go against moral principles and professional standards.

Marine Mammal Scientist

A specialist who studies the biology, behavior, and conservation of marine mammals such as whales, dolphins, and seals.

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