Due: December 5 at the

30 points total.

What to turn in: Written or typed answers for all questions.

(from R & N, pp610): Tickets to a lottery cost $1. There are two possible prizes: a $10 payoff, with probability 1/50, and a $1,000,000 payoff with probability 1/2,000,000. What is the expected value of a lottery ticket? What is the optimal number of tickets to buy, assuming your utility for money is linear?

Do Question 16.11 on pp 611 of R & N, parts b,c,d,e. (you may skip part a).

Do Question 20.15 on pp 761 of R & N, parts a,b,c.

This assignment has an optional programming component worth 10 points. The details on this can be found here. You must complete all required portions of the assignment to have your extra credit considered. Extra credit will also not be accepted late.