Waec Model Questions Vol1 2018 Civic Education Question 24
Practice objective / multiple choice question 24 from the 2018 Waec Model Questions Vol1 Civic Education examination.
A public procurement project is valued at ₦150 million. A corrupt official may inflate the contract by a factor x (final cost = x × 150 million). The probability of detection is p = 0.1x, capped at 0.9. If detected, the official must return the inflated amount and pay a fine equal to 1.5 times the inflated amount, so the net loss equals 2.5 times the illicit gain. The official's expected utility is the illicit gain multiplied by (1 - 3.5p). The official will only consider inflation levels for which the detection probability is below 0.2. What inflation factor x maximises the expected utility? (Give x to two decimal places.)
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About This Question
This is Waec Model Questions Vol1 2018 Civic Education Question 24. It is one of the objective questions from the 2018 Waec Model Questions Vol1 Civic Education examination.
Difficulty level: Hard .
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