Multiple Choice
Melanie must choose between two jobs. With job A, there is a 10% chance of earning $60,000 per year and a 90% chance of earning $50,000. With job B, there is a 50% chance of earning $46,000 and a 50% chance of earning $56,000. If Melanie is risk averse (U(W) = W1/2) , which job will she choose?
A) job B
B) her preferences violate the axioms of expected- utility theory.
C) job A
D) she is indifferent between the two jobs
Correct Answer:
Verified
Correct Answer:
Verified
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