Multiple Choice
Ronald has $18,000.But he is forced to bet it on the flip of a fair coin.If he wins he has $36,000.If he loses he has nothing.Ronald's expected utility function is .5x.5 + .5y.5, where x is his wealth if heads comes up and y is his wealth if tails comes up.Since he must make this bet, he is exactly as well off as if he had a perfectly safe income of
A) $16,000.
B) $15,000.
C) $12,000.
D) $11,000.
E) $9,000.
Correct Answer:
Verified
Correct Answer:
Verified
Q29: Timmy Qualm's uncle gave him a lottery
Q30: Willy's only source of wealth is his
Q31: Sally Kink is an expected utility maximizer
Q32: Oskar's preferences over gambles in which the
Q33: Oliver takes his wealth of $1,000 to
Q34: After graduating, Sallie Handshake's best job offer
Q35: There are two events, 1 and 2.The
Q36: Wilma is not risk averse.She is offered
Q37: Linus Piecewise is an expected utility maximizer.There
Q39: An expected utility maximizer's preferences between two