Chapter 5 T/F

A risk-averse consumer ignores risk and makes his or her decisions solely on the basis of expected value.

False

The expected value of simple information is the mean of a discrete probability distribution when the discrete random variable is expressed in term of dollars.

False

A Bernoulli process consists of a series of n independent and identical trials outcome remain the same.

False

We use the hypergeometric distribution in place of the binomial distribution when we are sampling with replacement from a population whose size N is significantly larger than the sample size n.

False

A Poisson random variable counts the number of successes (occurrences of a certain event) over a given interval of time or space.

True

A binomial random variable is defined as the number of successes achieved in n trials of a Bernoulli process.

True

A continuous random variable X assumes an (infinitely) uncountable number of distinct values.

True

A risk-neutral consumer ignores risk and makes his or her decisions solely on the basis of expected value.

True

The expected value of a random variable X can be referred to as the population mean.

True

The relationship between the variance and the standard deviation is such that the standard deviation is the positive square root of the variance.

True