Solution

ID: past-exam-of-the-options-ii-course-of-the-university-of-oxford/2011/m/m5/a/iv/solution

State is an absorbing state and a recurrent state. From every positive state, the stock decreases strictly at the next step and can never increase, so a return to that positive state is impossible. Thus all positive states are transient, with return probability zero. Starting from , absorption occurs within at most sticker-taking children.

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