Short Answer Problems In this assignment, you are going to apply what you have l

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Short Answer Problems In this assignment, you are going to apply what you have learned about random variables in a simple economic setting. You'll also see why it can be helpful/useful to assume that a random variable is uniformly distributed. We'll look at a very simple model of the decision to attend university. We will assume that students attend university when the benefits are larger than the costs. The benefits of university depend entirely on a person's ability. Ability is a random variable, called A, that is uniformly distributed with a minimum of 0 and a maximum of 100. The cost of attending university depends on tuition, T. Tuition is not a random variable. It is chosen by the government. Costs can be offset by a parental contribution, which is a random variable called B. For the purposes of this question, assume that B is a discrete variable that takes on four values. The probability distribution function for B is: .10 if b=0 .10 if b=20 .60 if b= 50 20) if b=80 Costs are independent of ability. A person will attend university if A> T-B. 5. (2 points) Assume that tuition is 100. Among people whose parents contribute nothing (i.e. B-0), what is the probability of attending university? Show your work, or explain your answer.

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Short Answer Problems In this assignment, you are going to apply what you have learned about random variables in a simple economic setting. You'll also see why it can be helpful/useful to assume that a random variable is uniformly distributed. We'll look at a very simple model of the decision to attend university. We will assume that students attend university when the benefits are larger than the costs. The benefits of university depend entirely on a person's ability. Ability is a random variable, called A, that is uniformly distributed with a minimum of 0 and a maximum of 100. The cost of attending university depends on tuition, T. Tuition is not a random variable. It is chosen by the government. Costs can be offset by a parental contribution, which is a random variable called B. For the purposes of this question, assume that B is a discrete variable that takes on four values. The probability distribution function for B is: .10 if b=0 .10 if b=20 .60 if b= 50 20) if b=80 Costs are independent of ability. A person will attend university if A> T-B. 5. (2 points) Assume that tuition is 100. Among people whose parents contribute nothing (i.e. B-0), what is the probability of attending university? Show your work, or explain your answer.

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