Suppose you won the lottery and had two options: (1) receiving $0.4 million or (2) taking a gamble in which, at the flip of a coin, you receive $0.8 million if a head comes up but receive zero if a tail comes up. a. What is the expected value of the gamble?
b. Suppose the payoff was actually $1.5 million - that was the only choice. You now face the choice of investing it in a U. S. Treasury bond that will return $1,590,000 at the end of a year or a common stock that has a 50-50 chance of being worthless or worth $3,300,000 at the end of the year.1. The expected profit on the T-bond investment is $90,000. What is the expected dollar profit on the stock investment? 2. The expected rate of return on the T-bond investment is 6%. What is the expected rate of return on the stock investment?3. Exactly how large would the expected profit (or the expected rate of return) have to be on the stock investment to make you invest in the stock, given the 6% return on the bond?

1   all nations face the problem of scarcity because there are limited resources and unlimited wants. nations do not have enough factors of production to produce everything that their population wants. entrepreneurial resources initiate businesses to make new goods and services; labor resources produce goods and services.

2 there are four factors of production: natural resources, labor resources, capital resources, and entrepreneurial resources. natural resources are raw materials from nature that are used to produce goods. trees, water, and grains are natural resources. some natural resources, such as wheat and cattle, are renewable

3 wants

things that you do not need to have in order to survive, but would like to have

needs

things that you must have in order to survive

goods

physical products

services

tasks that a business perform for customers

resources

items that people can use to make or obtain what they need or want

determine

to settle or decide by choice of alternatives or possiblities

4 i really dont know