question archive You have the opportunity to be involved in a great deal
You have the opportunity to be involved in a great deal
Subject:StatisticsPrice: Bought3
You have the opportunity to be involved in a great deal. For a cost of C, you can enter a gamble with the following probability distribution of reward R: P(R = 1,000) = 0.7, P(R = 5,000) = 0.1, P(R = 10,000) = 0.1, P(R = 50,000) = 0.075, and P(R = 100,000) = 0.025. Even though this gamble looks good (at least if C isn't too large), you also have the option of avoiding the gamble and getting a sure reward R. Assuming you're an EMV maximizer, which of the following is true?
a)If C = 7,000, and R = 1,500, you should take the sure R and avoid the gamble.
b )If C = 1,000, and R = 7,000, you should take the sure R and avoid the gamble.
c)If C = 5,000, and R = 2,500, you should take the sure R and avoid the gamble.
d) If C = 2,000, and R = 6,000, you should take the sure R and avoid the gamble.
