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Microeconomics 2nd – Krugman, Wells. Principles of Microeconomics, 4th Edition Prepared by Linda S. Edition by Paul R.

1. Microeconomics Krugman 4th Edition Solutions

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Microeconomics Krugman 4th Edition Solutions

4260-21-1P AID: 1084 RID: 672 Expected value of a random variable is the weighted average of all possible values of future events, where the weights on each possible value correspond to the probability of that value occurring. If there are N possible values, then the expected value ( EV) of a random variable is: EV= ( P 1× S 1) + ( P 2× S 2)+.+( P N× S N) (1) Where P 1=probability of state 1 S 1=state 1 P 2=probability of state 2 S 2=state 2 P N=probability of state N S N=state N (a) In Tanisha’s case P 1 and P 2 are 50% for two possible states of $100( S 1) and $70( S 2).