Question

356 36.5 37 385 396 40.5 416 4255 456 445 45 QUESTION 37 The state lottery offers a 1 in one million chance to win $1 million; if a ticket is $1.50, who would buy a ticket? risk-neutral people risk-averse people risk-loving people no one

Answer 1

Expected winnings = probability of winning * Amount of winning

= (1/1 million) * 1 million = $1 and the price is $1.5 and since the expected winning is less than that of price , risk seeking people tend to buy the ticket on the whole.

Therefore (c) risk loving people is the answer to the question