Sally Kink is an expected utility maximizer with utility function pu(c1)+ (1 - p)u(c2),where for any x $\lt$1,000,u(x)= 2x,and for x greater than or equal to 1,000,u(x)=0 2,000 + x.

A) Sally will be risk averse if her income is less than $1,000 but risk loving if her income is more than $1,000. B) Sally will never take a bet if there is a chance that it leaves her with wealth less than $2,000. C) Sally will be risk neutral if her income is less than $1,000 and risk averse if her income is more than $1,000. D) For bets that involve no chance of her wealth exceeding $1,000,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 $1,000 but risk loving if her income is more than $1,000. B) Sally will never take a bet if there is a chance that it leaves her with wealth less than $2,000. C) Sally will be risk neutral if her income is less than $1,000 and risk averse if her income is more than $1,000. D) For bets that involve no chance of her wealth exceeding $1,000,Sally will take any bet that has a positive expected net payoff. E) None of the above. D

(See Problem 11. )Albert's expected utility function is pc1/21+ (1 - p)c1/22,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 $\gt$ 2,090.50 and the lottery if Z $\lt$2,090.50. B) Z $\gt$ 1,040.50 and the lottery if Z $\lt$1,040.50. C) Z $\gt$ 2,500 and the lottery if Z $\lt$ 2,500. D) Z $\gt$ 1,681 and the lottery if Z $\lt$1,681. E) Z $\gt$ 1,870 and the lottery if Z $\lt$ 1,870. A) Z $\gt$ 2,090.50 and the lottery if Z $\lt$2,090.50. B) Z $\gt$ 1,040.50 and the lottery if Z $\lt$1,040.50. C) Z $\gt$ 2,500 and the lottery if Z $\lt$ 2,500. D) Z $\gt$ 1,681 and the lottery if Z $\lt$1,681. E) Z $\gt$ 1,870 and the lottery if Z $\lt$ 1,870. D

(See Problem 11. )Wilfred's expected utility function is pc1/21 +(1 - p)c1/22,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 $\gt$ 4,624 and the lottery if Z $\lt$4,624. B) Z $\gt$ 3,562 and the lottery if Z $\lt$ 3,562. C) Z $\gt$ 5,512 and the lottery if Z $\lt$ 5,512. D) Z $\gt$ 6,400 and the lottery if Z $\lt$ 6,400. E) Z $\gt$ 4,840 and the lottery if Z $\lt$ 4,840. A) Z $\gt$ 4,624 and the lottery if Z $\lt$4,624. B) Z $\gt$ 3,562 and the lottery if Z $\lt$ 3,562. C) Z $\gt$ 5,512 and the lottery if Z $\lt$ 5,512. D) Z $\gt$ 6,400 and the lottery if Z $\lt$ 6,400. E) Z $\gt$ 4,840 and the lottery if Z $\lt$ 4,840.

Sally Kink is an expected utility maximizer with utility function pu(c1)+ (1 -p)u(c2),where for any x $\lt$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 $\lt$ 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. )Jonas's expected utility function is pc1/21 + (1 - p)c1/22,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 $\gt$ 6,084 and the lottery if Z $\lt$6,084. B) Z $\gt$ 4,842 and the lottery if Z $\lt$ 4,842. C) Z $\gt$ 6,400 and the lottery if Z $\lt$6,400. D) Z $\gt$ 6,242 and the lottery if Z $\lt$6,242. E) Z $\gt$ 6,120 and the lottery if Z $\lt$6,120. A) Z $\gt$ 6,084 and the lottery if Z $\lt$6,084. B) Z $\gt$ 4,842 and the lottery if Z $\lt$ 4,842. C) Z $\gt$ 6,400 and the lottery if Z $\lt$6,400. D) Z $\gt$ 6,242 and the lottery if Z $\lt$6,242. E) Z $\gt$ 6,120 and the lottery if Z $\lt$6,120.

Sally Kink is an expected utility maximizer with utility function pu(c1)+ (1-p)u(c2),where for any x $\lt$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.