Pick Cards from a Randomly Shuffled Deck Until You Get

question 4

Multiple Choice

Pick cards from a randomly shuffled deck until you get a black card or 4 consecutive red cards; record the cards in order.

• A){BBBB,RBBB,RRBB,RRRB,RRRR},not equally likely
• B){B,RB,RRB,RRRB,RRRRB,RRRRRB,....},not equally likely
• C){B,RB,RRB,RRRB,RRRRB},not equally likely
• D){B,RB,RRB,RRRB,RRRR},not equally likely
• E){BBBB,BBBR,BBRB,BBRR,BRBB,BRBR,BRRB,BRRR,RBBB,RBBR,RBRB,RBRR,RRBB,RRBR,RRRB,RRRR},equally likely

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Definitions:

Engel Curve

A graphic representation showing how a consumer's demand for a good varies with income, keeping other factors constant.

Strictly Convex Preferences

Preferences where consumers always prefer mixtures of goods to extremes, demonstrating a consistent desire for variety.

Demand Curve

A graphical representation in economics that shows the relationship between the price of a good and the quantity of that good consumers are willing and able to purchase at varying price levels.

Homothetic Preferences

A consumer preference structure in which utility functions display constant returns to scale, meaning relative consumption patterns do not change as income levels change.