Author Question: Blanca has her choice of either a certain income of 20,000 or a gamble with a 0.5 probability of ... (Read 23 times)

kwoodring · **on:** Jul 1, 2018

Blanca has her choice of either a certain income of 20,000 or a gamble with a 0.5 probability of 10,000 and a 0.5 probability of 30,000. The expected value of the gamble:

A) is less than 20,000.
B) is 20,000.
C) is greater than 20,000.
D) cannot be determined with the information provided.

Question 2

Refer to Figure 9.1. If the market is in equilibrium, the consumer surplus earned by the buyer of the 1st unit is ________.

A) 5.00
B) 15.00
C) 22.50
D) 40.00