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Scenario 1: Aline and Sarah decide to go into business together as economic consultants. Aline believes they have a 5050 chance of earning $200,000 a
Scenario 1:
Aline and Sarah decide to go into business together as economic consultants. Aline believes they have a
5050
chance of earning $200,000 a year, and that if they don't, they'll earn $0. Sarah believes they have a 75% chance of earning $100,000 and a 25% chance of earning $10,000.
Refer to Scenario 1. The expected value of the undertaking,
A.
according to Sarah, is $75,000.
B.
according to Sarah, is $100,000.
C.
according to Sarah, is $110,000.
D.
according to Aline, is $200,000.
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