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Suppose a Decision Maker Has a Utility Function U=IU = \sqrt { I }

Question 62

Multiple Choice

Suppose a decision maker has a utility function U=IU = \sqrt { I } and is faced with a lottery where there is a 30% chance of earning $30 and a 70% chance of earning $80. What is the expected utility of this lottery?


A) 7.6
B) 7.9
C) 8.2
D) 8.5

Correct Answer:

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