Question 1(1 point)

Buying insurance typically maximizes expected value.

Question 1 options:

True

False

Question 2(1 point)

Suppose you are wondering whether to buy insurance for you phone. The policy you are looking at will cost $200 and will replace your phone (value of $750) if anything were to happen to it. What is the expected value of buying that policy?

Question 2 options:

• 550
• 750
• 200
• There is not enough information to answer the question

Question 3(1 point)

Suppose you are wondering whether to buy insurance for you phone. The policy you are looking at will cost $200 and will replace your phone (value of $750) if were to break or get stolen. You estimate that there is a 20% chance that your phone will break or get stolen. What is the value ofnotbuying that policy?

Question 3 options:

• 150
• 150
• There is not enough information to tell
• 200

Question 4(1 point)

Suppose Tina likes chocolate ice-cream better than raspberry, but she likes vanilla thebest. Which of the following is a plausible utility ranking for her?

Question 4 options:

Chocolate: 1; Raspberry: 6; Vanilla 10.

Chocolate: 9; Raspberry: 4; Vanilla 7.

Chocolate: 5; Raspberry: 6; Vanilla 7.

Chocolate: 5; Raspberry: 4; Vanilla 7.

Question 5(1 point)

Suppose Tina likes chocolate ice-cream better than raspberry, but she likes vanilla thebest. If she's trying to maximize utility, which of the following offers should she accept?

Question 5 options:

A 75% chance of gettinga scoop of Vanilla and a 30% chance of gettingnothing.

A 50% chance of gettinga scoop of Vanilla and a 50% chanceof gettinga scoop of Raspberry.

A scoop of chocolate.

There is not enough information to answer the question.

Question 6(1 point)

Question 6 options:

Two hairdressers work in Robert's salon. Robert and Billy Each customer has a 60% chance go beingserved by Robert, and a 40% chance each of beingserved by Billy. Customers receive a utility of 10 from being served by Robert, and of 5 of being served by Billy.

What is the expected utility for a customer at Robert's salon?

Question 7(1 point)

Question 7 options:

Three hairdressers work in Robert's salon. Robert, Billy, and Gina. Each customer has a 50% chance of beingserved by Robert, and a 25% chance each of being served by Billy or Gina. Customers receive a utility of 10 from being served by Robert, 7 of being served by Gina, and 5 of being served by Billy.

What is the expected utility for a customer at Robert's salon?

Question 8(1 point)

Suppose you are considering buying an insurance policy for your car that will replace it in case of a crash. The policy costs $300 and has a $1500 deductible. What is the expected value of buying the policy?

Question 8 options:

-$1800

-$300

-$1500

-There is not enough information to tell

Question 9(1 point)

Suppose your house is worth $1,000,000 and you have basic fire insurance that costs $50 per year. The insurance has a maximum coverage of $200,000. There is a 0.1% chance every year that your house will burn down and lose all its value. What is the expected value of keeping the basic insurance (instead of buying more insurance)?

Question 9 options:

-$1000

-$800

-$50

-$850

Question 10(1 point)

On a scale from 0-10 you value watching your favourite team win at 9 at watching them lose at 1. Your team is playing tonight and has a 40% chance of winning (there are no ties in this sport). What is the expected utility of watching the game?

Question 10 options:

4.2

3.6

9

60%