Business, 12.06.2021 18:30 kj44

Suppose you have $100 of endowment, and you are offered a chance to buy a lottery which costs $36. The lottery has 25% of chance to win a prize of $G, or you just lose and get nothing. Suppose your utility function on wealth is . What is the least prize size G that you will be willing to buy the lottery

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Answer from: Jadas960

The least prize size G that I will be willing to buy the lottery is 192

Explanation:

First, Calculate the expected utility

Expected utility = $\sqrt{100}$ = 10

There are two cases

Case 1

I win = 100 - 36 + G = 64 + G

Case 2

I lose = 100 - 36 = 64

Hence the expected utility can be calculated as follow

Expected utility = Chance to win x $\sqrt{( 64 + G )}$ + Chance to lose x $\sqrt{64}$

10 = 25% x $\sqrt{( 64 + G )}$ + ( 100% - 25% ) x $\sqrt{64}$

10 = 25% x $\sqrt{( 64 + G )}$ + 75% x 8

10 = 25% x $\sqrt{( 64 + G )}$ + 6

10 - 6 = 25% x $\sqrt{( 64 + G )}$

4 = 25% x $\sqrt{( 64 + G )}$

4 / 25% = $\sqrt{( 64 + G )}$

16 = $\sqrt{( 64 + G )}$

$16^{2}$ = $(\sqrt{( 64 + G )})^{2}$

256 = 64 + G

G = 256 - 64

G = 192

Answer from: Quest

in 2001, dell computer became the world’s largest personal computer vendor, continuing to

gain market share and post profits in an industry struggling with slumping sales and billions of

dollars in losses. dell sells 90% of its pcs directly to the final customer, largely bypassing the

reseller channel that accounts for most of the world’s pc sales. this direct customer relationship

is the key to dell’s business model, and provides distinct advantages over the indirect sales

model. dell’s direct relationship with the customer allows it to tailor its offerings to customer

needs, offer add-on products and services, and use the internet to offer a variety of customer

services. in addition, dell’s pcs are built to customers’ specifications upon receipt of an order,

giving dell additional advantages over indirect pc vendors who must try to forecast demand and

ship products based on those forecasts. dell’s direct sales and build-to-order model has achieved

superior performance in the pc industry in terms of inventory turnover, reduced overhead, cash

conversion, and return on investment (kraemer, et al., 2000).

explanation:

Answer from: Quest

In line with other previous and contemporaneous proposals, in 1912 the meteorologist alfred wegener amply described what he called continental drift, expanded in his 1915 book the origin of continents and oceans and the scientific debate started that would end up fifty years later in the theory of plate tectonics.

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Suppose you have $100 of endowment, and you are offered a chance to buy a lottery which costs $36. T...