Diminishing marginal utility of dollars

Assignment Help Macroeconomics

Reference no: EM1368307

A mathematically fair bet is one in which the amount won will on average equal the amount bet,for example, when a gambler bets say, $100 for a 10 percent chance to win $1000 ($100=.10x$1000). Assuming diminishing marginal utility of dollars, explain why this is not a fair bet in terms of utility. Why is it even a less fair bet when the house takes a cut of each dollar bet? So is gambling irrational?

Reference no: EM1368307

Questions Cloud

Explain growth maximisation model of morris : Describe critically growth maximisation model of morris - Grade Level : Post Graduate Level

Determining total value : A philanthropist working to set up a permanent endowment wants to deposit money each year, starting now and making ten more deposits,

Calculate changes in real gdp : In 1929 and 1933, GDP measured in current prices fell from $96 billion to $48 billion. Over the same period, relevant price index fell from 100 to 75.

Explain what are needs of employees and their families : Explain What are needs of employees and their families and How do we protect them and What are needs for protecting our organization?

Diminishing marginal utility of dollars : A mathematically fair bet is one in which amount won will on average equal the amount bet,for example, when a gambler bets say, $100 for a 10% chance to win $1000

Describe market orientation case help : Describe Market orientation case help and Imagine you are tasked to diagnose market orientation of a specific business

Calculate the mean and standard deviation : Sandy James thinks housing values stabilized last months. To convince boss, intends compare current prices year prices. She collected 12 housing prices adds:

Determine same level of satisfaction : Debra listens only to either Frank Zappa or Weird Al Yankovic. She currently purchases 20 Zappa and 30 Yankovic downloads per week. She would forgo Yankovic downloads for one Zappa download at the rate of 2 to 1

Find the price of the call option : Experiment with the number of steps for binomial tree model until your numerical result stabilizes to within one cent of the result given through the Black-Scholes formula.

User Account

All Pages