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Suppose that Belinda challenges Sara to a wager over a coin toss. If the coin lands heads up, Sara loses and has to pay Belinda $25. If the coin lands heads down (tails up), Sara wins and Belinda pays her $60. What is Sara's expected value of accepting the wager?Is it economically rational for Sara to agree to the wager, and why?-No, agreeing to any wager is economically irrational by definition.-Yes, the expected value of the wager is positive.-Yes, the expected value of the wager is negative.-No, the expected value of the wager is negative.
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