Nick Is Consideriog Buyiog a New Bicycle

Multiple Choice

Nick is consideriog buyiog a new bicycle.Here are his options: Bike A- costs $100.It has a 60% chance of breaking down in the next year.Bike B- costs $200.It has a 20% chance ofbreakiog down in the next year.Bike C- costs $400.It has a 15% chance ofbreakiog down in the next year.
Which bike should Nick purchase based on expected utility theory of repair costs?

A) Bike A
B) BikeB
C) Bike C
D) Either bike A or C
E) We can't possibly answer the question with the ioformation provided.