Question

Attempts: Score: 12 8. Further questions Now, imagine that Port Chester decides to crack down on motorists who park illegally by increasing the number of officers issuing parking tickets (thus, raising the probability of a ticket). If the cost of a ticket is $100, and the opportunity cost for the average driver of searching for parking is $12. which of the following probabilities would make the average person stop parking illegally? Assume that people will not park illegally if the expected value of doing so is negative. Check all that apply. 13% 22% 17% 2% Alternatively, the city could hold the number of officers constant and discourage parking violations by raising the fine for illegal parking. Suppose the average probability of getting caught for parking illegally is currently 10% citywide, and the average opportunity cost of parking is, again, $12. The fine that would make the average person indifferent between searching for parking and parking illegally is S . assuming that people will not park illegally of the expected value of doing so is negative. Save & Continue Continue without saving

Answer 1

Let to be the peobability of getting a expected value of parsing is zero. Then ticket such that the El El Parking) = p. (-100)+(1-P) (12) 0 = -10op + 12 -128 112 p = 12 p = 0.107 Therefore for every value greeter then & -0.107= 10.7t.. people will not park illegelly. Hence a, ale and are the correct answer If the probability increases by lot ie p=0.207. Then let f be the fine for illegel parking. If eat the value of bine = f makes the druer indifferent between Searching for parking and parking illegelly, then Etra at thet pourt the escpected value of parking is o Elparking) = f (6) + (1-6) (12) 0 = 0.207 (8) + 0.793 (12) f = -9.516 6 =-45.971 0 207 That is the value of bine should be 45-9718 MAA