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George Is Indifferent Between $100 and a Bet with a 0.6

Question 8

Multiple Choice

George is indifferent between $100 and a bet with a 0.6 chance of $50 and a 0.4 chance of $200.If U(50) = a and U(200) = b,then U(100) = :


A) 0.4a + 0.6b.
B) 0.6a + 0.4b.
C) (a + b) / 2.
D) a + b.
E) 6a + 4b.

Correct Answer:

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