(Answered) Calculate the expected payoff of lottery

Economics

Problem: Consider the following lottery: with Prob 13 it yields payoff $0, with Prob 16 it yields $4, with remaining probability it yields $9. Describe your answer and give examples.

Required:

(a) Calculate the expected payoff of this lottery.

(b) Suppose John's preference over monetary payoff the is represented by the utility function u(w) = 2w+100, where w is the amount of monetary payoff. What's the certainty equivalent of this lottery for John?

(c) Suppose John's wife Mary has utility function over monetary payoff v(w) =√w. what's the certainty equivalent of this lotteryfor Mary?

View complete question

Macroeconomics, Economics

Category:- Macroeconomics
Reference No.:- M91811723
Price:- $15

Verified Expert

Priced at $30 Now at $15, Verified Solution

Have any Question?Write your Review or question?

Related Questions in Macroeconomics

Question - consumer choice problems duality ii individuals

Question - Consumer choice problems (duality) II Individuals consume three breakfast goods - cereal q1, bacon q2 and eggs q3. Preferences are modelled by an indirect utility function v(p1, p2, p3, y) = y/ Root(p1(p2+p3)) ...

Economics assignment -part a microeconomicsconsider the

Economics Assignment - Part A: Microeconomics Consider the following three sources. Source 1. Macquarie Analysis: Woolworths Trails Coles on Grocery Prices (by Catie Low) Source 2: Supermarkets Price War Source 3: Suppor ...

The economics of cities and regions assignment - report -

The Economics of Cities and Regions Assignment - Report - Shift-Share Analysis and LGA Economic Futures Shift-share analysis and local council report on economic futures. Background: Shift-share analysis is a common econ ...

Question consider the technology represented by y x104

Question: Consider the technology represented by y = (x_1)^0.4 (x_2)^0.6. The marginal products are MP_1 = 0.4/x_1 and MP_2 = 0.6/x_2. We now consider the problem of cost minimization. Write the problem of cost minimizat ...

Assignment -part 1 -brief description of the company - name

Assignment - PART 1 - BRIEF DESCRIPTION OF THE COMPANY - Name of your company and ASX code Why did you chose this company What do you know about this company Number of shares purchased (show calculations) Total amount of ...

Question topic 2 product or service offered and global

Question: Topic 2: Product or Service Offered and Global Consumption Describe the product or service including brand/logo and packaging. In addition, use the following link, and visit the globalEdge website and describe ...

Question - the space below shows the budget constraint

Question - The space below shows the budget constraint between food (F) and non-food consumption (X). This household has $800/month to spend on the two goods, the price of food = $4/unit and PX = 1. Label both axes and b ...

Question - suppose you are drawing cards out of a 30 card

Question - Suppose you are drawing cards out of a 30 card deck. The following table reports the value of each type of card and the frequency of each type. Value Frequency 1 6 2 7 3 6 4 3 5 8 Are the card values discrete ...

Question assume two countries a and b with sizes of

Question: Assume two countries, A and B, with sizes of domestic markets 300 million and 533 1 3 million units in annual sales, respectively. In this market, firms compete by differentiating their product, while the cost ...

Question - consider a community consisting of three voters

Question - Consider a community consisting of three voters, Al, Bob and Cathy. The Marginal Benefit function for each person is, for lighthouse service G is; MBa = 40 - 4G for Al, MBb = 20 - 2G for Bob, and MBc = 10 - G ...

4,153,160 Questions Asked
13,132 Experts
2,558,936 Questions Answered

Ask Experts for help!!

Looking for Assignment Help?

Start excelling in your Courses, Get help with Assignment

Write us your full requirement for evaluation and you will receive response within 20 minutes turnaround time.

Ask Now Help with Problems, Get a Best Answer

Recent Questions

Ask Macroeconomics Expert