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Pat's Utility Function Is U(y)= Y1/2 and His Income Is

Question 22

Multiple Choice

Pat's utility function is u(y) = y1/2 and his income is $100. He is offered a gamble paying $300 with probability 1/2 and $0 with probability 1/2. What is the certainty equivalent of this gamble?


A) 100
B) 150
C) 50
D) 75

Correct Answer:

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