Which of the Following Chances Has the Biggest Expected Return

question 35

Multiple Choice

Which of the following chances has the biggest expected return?

• A) a 40% chance of winning $200 and a 60% chance of winning $0
• B) a 100% chance of getting $100
• C) a 50% chance of winning $200, 30% chance of winning $400 and a 20% chance of losing $400
• D) All of the above have the same expected return.

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Definitions:

Private Cost

The direct cost that producers or consumers incur through their actions, not including externalities.

Private Value

Refers to the value that an individual or a private entity assigns to a good or service, based on personal assessment rather than market perception.

Economists

Experts in economics who study, develop, and apply theories and concepts about how economies work and distribute resources.

Polluting

The act of discharging harmful substances into the environment, negatively affecting air, water, and soil quality.