FHCE 3150 final exam ACTUAL UPDATED QUESTIONS AND CORRECT ANSWERS
what is the expected value of a gamble where you toss a $5
coin and win $20 if it lands heads and lose $10 if it lands
tails?
which of the following is not a fair gamble? b. one coin toss: win $10 if heads, lose nothing if tails
a. one coin toss: win $10 if heads, lose $10 if tails
b. one coin toss: win $10 if heads, lose nothing if tails
c. two coin tosses: win $10 if two heads, lose $10 if two
tails, no change of wealth otherwise
d. all of the above are fair gambles
which of the following gambles will be the most attractive a single coin toss: win $10 if heads, lose $10 if tails
to a person with a diminishing marginal utility of wealth?
assuming there is no pleasure in gambling, a risk-averse always refuse a fair gamble
person with perfect information will:
a person who is said to be a risk-taker is characterized increasing marginal utility of wealth
by:
we can be sure that a person is a risk-seeker if: he always accepts a gamble that has a zero expected value
eleanor and her father have identical driving records for statistical discrimination
the last ten years and neither one has had an accident or
insurance claim. despite that record, she pays more for
her car insurance than he does. what might be the reason
for this?
, persons whose utility functions with respect to wealth are risk-neutral
straight lines are said to be:
megan is trying to decide whether to buy house buy the insurance
insurance for her home in Miami. her house is worth
200,000 and analysts have determined that the average
loss from a hurricane could be 45,000. they have also
determined there is a 50% chance that she will face a
hurricane. suppose megan is a risk averse person with a
utility-of-income function such as the one given below. if
the policy costs 22,500, megan will:
for a large group of individuals, the proportion of people more predictable than for a small group of people
who will have accidents is:
the "self-interest standard" of rationality considers an act it efficiently promotes the ongoing material interest of the person who performs it
to be rational if: without the requirement that social justice will be achieved
assume that you always behave according to the rational see the two events as exactly offsetting and thereby of no consequence to your
choice model. when confronted with a loss of $100 on happiness
the same day in which you receive an unexpected gift of
$100 you would:
the Kahneman-Tversky value function is: steeper in losses than in gains
the Kahneman-Tversky value function shows that a gain of is valued less than two gains of $50
$100:
if one codes mental losses and gains and has an do not ignore sunk costs in some decisions
asymmetric value function in which losses are felt more
keenly than foregone gains of equal value, then it is
possible to explain why people
a panel of present-day baseball fans was selected by a from the stars of the present and the recent past
newspaper to pick an all-time baseball all-star team. the
"availability" heuristic of consumer decision-making
suggests they are most likely to make selections:
suppose you can choose between two lifetime income the second choice is generally preferred because the steadily improving income
paths: could prevent the loss of utility due to adaptation
a. an option that gives you a constant stream of 100,000
every year of your productive life,
b. an option that pays you an average of 100,000 per
year, but that begins at 50,000 and gradually increases
until it ends at 150,000. based on evidence how
adaptation affects happiness, which of the following
would be true?
what is the expected value of a gamble where you toss a $5
coin and win $20 if it lands heads and lose $10 if it lands
tails?
which of the following is not a fair gamble? b. one coin toss: win $10 if heads, lose nothing if tails
a. one coin toss: win $10 if heads, lose $10 if tails
b. one coin toss: win $10 if heads, lose nothing if tails
c. two coin tosses: win $10 if two heads, lose $10 if two
tails, no change of wealth otherwise
d. all of the above are fair gambles
which of the following gambles will be the most attractive a single coin toss: win $10 if heads, lose $10 if tails
to a person with a diminishing marginal utility of wealth?
assuming there is no pleasure in gambling, a risk-averse always refuse a fair gamble
person with perfect information will:
a person who is said to be a risk-taker is characterized increasing marginal utility of wealth
by:
we can be sure that a person is a risk-seeker if: he always accepts a gamble that has a zero expected value
eleanor and her father have identical driving records for statistical discrimination
the last ten years and neither one has had an accident or
insurance claim. despite that record, she pays more for
her car insurance than he does. what might be the reason
for this?
, persons whose utility functions with respect to wealth are risk-neutral
straight lines are said to be:
megan is trying to decide whether to buy house buy the insurance
insurance for her home in Miami. her house is worth
200,000 and analysts have determined that the average
loss from a hurricane could be 45,000. they have also
determined there is a 50% chance that she will face a
hurricane. suppose megan is a risk averse person with a
utility-of-income function such as the one given below. if
the policy costs 22,500, megan will:
for a large group of individuals, the proportion of people more predictable than for a small group of people
who will have accidents is:
the "self-interest standard" of rationality considers an act it efficiently promotes the ongoing material interest of the person who performs it
to be rational if: without the requirement that social justice will be achieved
assume that you always behave according to the rational see the two events as exactly offsetting and thereby of no consequence to your
choice model. when confronted with a loss of $100 on happiness
the same day in which you receive an unexpected gift of
$100 you would:
the Kahneman-Tversky value function is: steeper in losses than in gains
the Kahneman-Tversky value function shows that a gain of is valued less than two gains of $50
$100:
if one codes mental losses and gains and has an do not ignore sunk costs in some decisions
asymmetric value function in which losses are felt more
keenly than foregone gains of equal value, then it is
possible to explain why people
a panel of present-day baseball fans was selected by a from the stars of the present and the recent past
newspaper to pick an all-time baseball all-star team. the
"availability" heuristic of consumer decision-making
suggests they are most likely to make selections:
suppose you can choose between two lifetime income the second choice is generally preferred because the steadily improving income
paths: could prevent the loss of utility due to adaptation
a. an option that gives you a constant stream of 100,000
every year of your productive life,
b. an option that pays you an average of 100,000 per
year, but that begins at 50,000 and gradually increases
until it ends at 150,000. based on evidence how
adaptation affects happiness, which of the following
would be true?
