Using Scenario 2 suppose Jennifer has eliminated three of the ...

[Cooldude101]

Using Scenario 2 suppose Jennifer has eliminated three of the answers but is unsure of which of the remaining two answers are correct. Determine whether it is rational for Jennifer to guess.
 
  What will be an ideal response?

Question 2

Refer to Table 4-4. If a minimum wage of 9.50 an hour is mandated, what is the quantity of labor demanded?
 
  A) 380,000 B) 370,000 C) 360,000 D) 10,000

[Pswine]

Answer to Question 1

What we need to do is to compute the expected value of guessing and compare it to the expected value of leaving the question unanswered. The expected value of guessing if she has eliminated three answers is 1/2 (9) + 1/2 (-5) = 9/2  5/2 = 4/2 = 2 . Since this is greater than the expected utility of skipping the question with a value of zero Jennifer should elect to answer the question.

Answer to Question 2

C

[Cooldude101]

Thank you

[Pswine]

Happy to help you