6 Lazlo has unsurprisingly ran into money trouble. He needs to borrow somemoney and offers you these terms. You loan him $500, and in six months he willpay you back $505. Suppose that you estimate that Lazlo will pay you back in fullwith probability 80%. Do you loan Lazlo the $500? *O yesO noLazlo has unsurprisingly ran into money trouble. He needs to borrow somemoney and offers you these terms. You loan him $500, and in six months he willpay you back $X. Suppose that you estimate that Lazlo will pay you back in fullwith probability 80%. Do you loan Lazlo the $50O? What is the smallest value of Xyou would accept?*O at least $600at least $580at least $560O at least $540O at least $520O at least $500 Lazlo visits one day and offers you a new gamble, this time involving dice. First,you must pay him $5. He will roll a six-sided die twice. If the sum total of the tworolls is greater than or equal to 7 he will pay you $20. Would you accept thisgamble? *yesnoO This is a required questionSuppose in the dice game that after the first roll Lazlo offers you a "buy-out." Ifyou want to avoid rolling the second time you can pay $2.50 and you get $2.50back from your entry fee. Suppose you have just rolled a 3 for your first roll. Doyou "buy-out" and avoid rolling the second time?*yesnowut?Suppose Lazlo offers you a much higher stakes dice game. The entry fee is $10.This time he'll roll the dice 3 times. If the sum total is greater than 13 he'll pay you$50, if its great than 7 hell pay you $11 If its less than 7 you don't receive anymoney. Do you accept this gamble? *O yesno

Disclaimer :- as you posted multiple questions we are supposed to solve the first one only. Here…

Lazlo has unsurprisingly ran into money trouble. He needs to borrow some money and offers you these terms. You loan him $500, and in six months he will pay you back $505. Suppose that you estimate that Lazlo will pay you back in full with probability 80%. Do you loan Lazlo the $500? * O yes O no

Lazlo has unsurprisingly ran into money trouble. He needs to borrow some money and offers you these terms. You loan him $500, and in six months he will pay you back $505. Suppose that you estimate that Lazlo will pay you back in full with probability 80%. Do you loan Lazlo the $500? * O yes O no

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

Lazlo has unsurprisingly ran into money trouble. He needs to borrow some
money and offers you these terms. You loan him $500, and in six months he will
pay you back $505. Suppose that you estimate that Lazlo will pay you back in full
with probability 80%. Do you loan Lazlo the $500? *
O yes
O no
Lazlo has unsurprisingly ran into money trouble. He needs to borrow some
money and offers you these terms. You loan him $500, and in six months he will
pay you back $X. Suppose that you estimate that Lazlo will pay you back in full
with probability 80%. Do you loan Lazlo the $50O? What is the smallest value of X
you would accept?*
O at least $600
at least $580
at least $560
O at least $540
O at least $520
O at least $500

Lazlo visits one day and offers you a new gamble, this time involving dice. First,
you must pay him $5. He will roll a six-sided die twice. If the sum total of the two
rolls is greater than or equal to 7 he will pay you $20. Would you accept this
gamble? *
yes
no
O This is a required question
Suppose in the dice game that after the first roll Lazlo offers you a "buy-out." If
you want to avoid rolling the second time you can pay $2.50 and you get $2.50
back from your entry fee. Suppose you have just rolled a 3 for your first roll. Do
you "buy-out" and avoid rolling the second time?*
yes
no
wut?
Suppose Lazlo offers you a much higher stakes dice game. The entry fee is $10.
This time he'll roll the dice 3 times. If the sum total is greater than 13 he'll pay you
$50, if its great than 7 hell pay you $11 If its less than 7 you don't receive any
money. Do you accept this gamble? *
O yes
no

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