Alex,who is risk-neutral,is looking for an apartment.The distribution of apartments of equal quality is as follows: 70% rent for $700 per month,20% rent for $600 per month,and 10% rent for $500 per month.Alex's costs of searching rise by $10 with each search.
The first apartment Alex visits rents for $700.What is the expected value of visiting a second apartment?

Question

Quizplus · Accepted Answer

The Answer of Alex,who is risk-neutral,is looking for an apartment.The distribution of apartments of equal quality is as follows: 70% rent for $700 per month,20% rent for $600 per month,and 10% rent for $500 per month.Alex's costs of searching rise by $10 with each search.
The first apartment Alex visits rents for $700.What is the expected value of visiting a second apartment?

Alex,who Is Risk-Neutral,is Looking for an Apartment