9.There are 400,000 people aged 22-24 and 1,500 of them died last year. An insurance company believes that the probability of someone aged 22-24 dying this year is:(a) 0.0015;(b) 0.00015;(c) 0.0375;(d) 0.00375; (e) 0.000375. 10.On any given day a car guard earns zero with probability 20%, R30 with probability 30%, R50 with probability 20%, R60 with probability 20% and R80 with probability 10%. What are his expected earnings?

11.Suppose that Henry refuses a bet with an expected gain of R100. What can we conclude about Henry’s attitude to risk?Use the following information to answer questions 12 and 13:Two firms – Betapie and Crunchy – are competing for a government contract and each has a 1/2 chance of winning. The shares of the winning firm will rise in value to R50 and the shares in the other firm will fall in value to R20. The current share price is R30 and an investor can afford to buy two shares.12. What is the expected value and variance of a portfolio in which the investor buys one share in each firm?13. What is the expected value and variance of a portfolio in which the investor buys two shares in Betapie and no shares in Crunchy?(a) 50, 0;(b) 70, 0;(c) 50, 450;(d) 70, 450;(e) 70, 900. 14. In the case of a negative externality, the social marginal cost (SMC) will:

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- Spring '11
- Mohammad
- Economics, Public Good, Externality