(See Problem 11.) Lawrence's expected utility function is , where p is the probability that he consumes c1 and 1 - p is the probability that he consumes c2. Lawrence is offered a choice between getting a sure payment of $Z or a lottery in which he receives $400 with probability .30 or $2,500 with probability .70. Lawrence will choose the sure payment if

A) Z > 1,040.50 and the lottery if Z 2,500 and the lottery if Z 2,090.50 and the lottery if Z 1,681 and the lottery if Z 1,870 and the lottery if Z 1,040.50 and the lottery if Z 2,500 and the lottery if Z 2,090.50 and the lottery if Z 1,681 and the lottery if Z 1,870 and the lottery if Z < 1,870.

(See Problem 11.) Jonas's expected utility function is , where p is the probability that he consumes c1 and 1 - p is the probability that he consumes c2. Jonas is offered a choice between getting a sure payment of $Z or a lottery in which he receives $3,600 with probability .10 or $6,400 with probability .90. Jonas will choose the sure payment if

A) Z > 6,084 and the lottery if Z 4,842 and the lottery if Z 6,400 and the lottery if Z 6,242 and the lottery if Z 6,120 and the lottery if Z 6,084 and the lottery if Z 4,842 and the lottery if Z 6,400 and the lottery if Z 6,242 and the lottery if Z 6,120 and the lottery if Z < 6,120.

Sally Kink is an expected utility maximizer with utility function pu(c1) + (1 - p)u(c2), where for any x < 7,000, u(x) = 2x, and for x greater than or equal to 7,000, u(x) = 14,000 + x.

A) Sally will be risk averse if her income is less than $7,000 but risk loving if her income is more than $7,000. B) Sally will be risk neutral if her income is less than $7,000 and risk averse if her income is more than $7,000. C) Sally will never take a bet if there is a chance that it leaves her with wealth less than $14,000. D) For bets that involve no chance of her wealth exceeding $7,000, Sally will take any bet that has a positive expected net payoff. E) None of the above. A) Sally will be risk averse if her income is less than $7,000 but risk loving if her income is more than $7,000. B) Sally will be risk neutral if her income is less than $7,000 and risk averse if her income is more than $7,000. C) Sally will never take a bet if there is a chance that it leaves her with wealth less than $14,000. D) For bets that involve no chance of her wealth exceeding $7,000, Sally will take any bet that has a positive expected net payoff. E) None of the above.

(See Problem 11.) Albert's expected utility function is , where p is the probability that he consumes c1 and 1 - p is the probability that he consumes c2. Albert is offered a choice between getting a sure payment of $Z or a lottery in which he receives $400 with probability .30 or $2,500 with probability .70. Albert will choose the sure payment if

A) Z > 2,090.50 and the lottery if Z 1,040.50 and the lottery if Z 2,500 and the lottery if Z 1,681 and the lottery if Z 1,870 and the lottery if Z 2,090.50 and the lottery if Z 1,040.50 and the lottery if Z 2,500 and the lottery if Z 1,681 and the lottery if Z 1,870 and the lottery if Z < 1,870.

Sally Kink is an expected utility maximizer with utility function pu(c1) + (1 - p)u(c2), where for any x < 8,000, u(x) = 2x, and for x greater than or equal to 8,000, u(x) = 16,000 + x.

A) Sally will never take a bet if there is a chance that it leaves her with wealth less than $16,000. B) Sally will be risk neutral if her income is less than $8,000 and risk averse if her income is more than $8,000. C) Sally will be risk averse if her income is less than $8,000 but risk loving if her income is more than $8,000. D) For bets that involve no chance of her wealth exceeding $8,000, Sally will take any bet that has a positive expected net payoff. E) None of the above. A) Sally will never take a bet if there is a chance that it leaves her with wealth less than $16,000. B) Sally will be risk neutral if her income is less than $8,000 and risk averse if her income is more than $8,000. C) Sally will be risk averse if her income is less than $8,000 but risk loving if her income is more than $8,000. D) For bets that involve no chance of her wealth exceeding $8,000, Sally will take any bet that has a positive expected net payoff. E) None of the above.

Sally Kink is an expected utility maximizer with utility function pu(c1) + (1 - p)u(c2), where for any x < 6,000, u(x) = 2x, and for x greater than or equal to 6,000, u(x) = 12,000 + x.

A) Sally will be risk neutral if her income is less than $6,000 and risk averse if her income is more than $6,000. B) Sally will be risk averse if her income is less than $6,000 but risk loving if her income is more than $6,000. C) For bets that involve no chance of her wealth exceeding $6,000, Sally will take any bet that has a positive expected net payoff. D) Sally will never take a bet if there is a chance that it leaves her with wealth less than $12,000. E) None of the above. A) Sally will be risk neutral if her income is less than $6,000 and risk averse if her income is more than $6,000. B) Sally will be risk averse if her income is less than $6,000 but risk loving if her income is more than $6,000. C) For bets that involve no chance of her wealth exceeding $6,000, Sally will take any bet that has a positive expected net payoff. D) Sally will never take a bet if there is a chance that it leaves her with wealth less than $12,000. E) None of the above.

(See Problem 11.) Wilfred's expected utility function is , where p is the probability that he consumes c1 and 1 - p is the probability that he consumes c2. Wilfred is offered a choice between getting a sure payment of $Z or a lottery in which he receives $2,500 with probability .40 or $6,400 with probability .60. Wilfred will choose the sure payment if

A) Z > 4,624 and the lottery if Z 3,562 and the lottery if Z 5,512 and the lottery if Z 6,400 and the lottery if Z 4,840 and the lottery if Z 4,624 and the lottery if Z 3,562 and the lottery if Z 5,512 and the lottery if Z 6,400 and the lottery if Z 4,840 and the lottery if Z < 4,840.

Sally Kink is an expected utility maximizer with utility function pu(c1) + (1 - p)u(c2), where for any x < 6,000, u(x) = 2x, and for x greater than or equal to 6,000, u(x) = 12,000 + x.

A) Sally will be risk averse if her income is less than $6,000 but risk loving if her income is more than $6,000. B) Sally will be risk neutral if her income is less than $6,000 and risk averse if her income is more than $6,000. C) For bets that involve no chance of her wealth exceeding $6,000, Sally will take any bet that has a positive expected net payoff. D) Sally will never take a bet if there is a chance that it leaves her with wealth less than $12,000. E) None of the above. A) Sally will be risk averse if her income is less than $6,000 but risk loving if her income is more than $6,000. B) Sally will be risk neutral if her income is less than $6,000 and risk averse if her income is more than $6,000. C) For bets that involve no chance of her wealth exceeding $6,000, Sally will take any bet that has a positive expected net payoff. D) Sally will never take a bet if there is a chance that it leaves her with wealth less than $12,000. E) None of the above.

(See Problem 11.) Pete's expected utility function is , where p is the probability that he consumes c1 and 1 - p is the probability that he consumes c2. Pete is offered a choice between getting a sure payment of $Z or a lottery in which he receives $1,600 with probability .80 or $14,400 with probability .20. Pete will choose the sure payment if

A) Z > 3,136 and the lottery if Z 8,768 and the lottery if Z 14,400 and the lottery if Z 2,368 and the lottery if Z 4,160 and the lottery if Z 3,136 and the lottery if Z 8,768 and the lottery if Z 14,400 and the lottery if Z 2,368 and the lottery if Z 4,160 and the lottery if Z < 4,160.