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Author Question: Mike owns a car worth 20,000, and that is his only wealth. There is a 10 percent chance that Mike ... (Read 107 times)

faduma

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on: Jun 29, 2018
Mike owns a car worth 20,000, and that is his only wealth. There is a 10 percent chance that Mike will have an accident within a year. If he does have an accident, his car is worthless. What is Mike's expected wealth?
 
  What will be an ideal response?

Question 2

The income that measures a household's earnings in the absence of government redistribution is called
 
  A) market income.
  B) real income.
  C) money income.
  D) cash income.


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joanwhite

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Reply #1 on: Jun 29, 2018
Answer to Question 1

The probability of an accident is 0.1, and the probability of not having an accident is 0.9. So Mike's expected wealth is 20,000  0.9 + 0  0.1 = 18,000.

Answer to Question 2

A


faduma

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Reply 2 on: Jun 29, 2018
Excellent

dyrone

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Reply 3 on: Yesterday
Thanks for the timely response, appreciate it

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