d. open-market sale; decreases 4?9.varTh 9. You would like to purchase a lottery
ID: 1153611 • Letter: D
Question
d. open-market sale; decreases 4?9.varTh 9. You would like to purchase a lottery ticket that a friend of yours has, but he would like you to pay more than the expected value of this ticket otherwise he won't sell. What type of friend is this, and why would you purchase this ticket? a. This friend is risk loving; I would purchase if I am even more risk loving than he is. b. This friend is risk loving; I would purchase this ticket if I was risk averse. c. This friend is risk averse; I would purchase ifI was even more risk averse than he is. This friend is risk averse; I would purchase this ticket if I was risk loving. trode this must imply that:Explanation / Answer
My friend wants to sell the lottery by more than the expected value as he has a fear that if I win then he will make a loss if he sells the ticket at a low price. Therefore my friend is risk-averse.
If I am a risk-loving person, I do not have fear to make a loss so I would like to purchase the lottery.
option d is correct.
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