Albert's expected utility function is pc1/21 + (1 - p)c1/22, where p is the probability that he consumes c1 and 1 - p is the probability that he consumes c2.Albert is offered a choice between getting a sure payment of $Z or a lottery in which he receives $400 with probability .30 or $2,500 with probability .70.Albert will choose the sure payment if

A) Z > 2,090.50 and the lottery if Z 1,040.50 and the lottery if Z 2,500 and the lottery if Z 1,681 and the lottery if Z 1,870 and the lottery if Z 2,090.50 and the lottery if Z 1,040.50 and the lottery if Z 2,500 and the lottery if Z 1,681 and the lottery if Z 1,870 and the lottery if Z < 1,870.

Sally Kink is an expected utility maximizer with utility function pu(c1)+ (1 - p)u(c2), where for any x < 6,000, u(x)= 2x, and for x greater than or equal to 6,000, u(x)= 12,000 + x.

A) Sally will be risk neutral if her income is less than $6,000 and risk averse if her income is more than $6,000. B) Sally will be risk averse if her income is less than $6,000 but risk loving if her income is more than $6,000. C) For bets that involve no chance of her wealth exceeding $6,000, Sally will take any bet that has a positive expected net payoff. D) Sally will never take a bet if there is a chance that it leaves her with wealth less than $12,000. E) None of the above. A) Sally will be risk neutral if her income is less than $6,000 and risk averse if her income is more than $6,000. B) Sally will be risk averse if her income is less than $6,000 but risk loving if her income is more than $6,000. C) For bets that involve no chance of her wealth exceeding $6,000, Sally will take any bet that has a positive expected net payoff. D) Sally will never take a bet if there is a chance that it leaves her with wealth less than $12,000. E) None of the above.

Exam 11: Uncertainty-Part B

Albert's expected utility function is pc^1/2₁ + (1 - p)c^1/2₂, where p is the probability that he consumes c₁ and 1 - p is the probability that he consumes c₂.Albert is offered a choice between getting a sure payment of $Z or a lottery in which he receives $400 with probability .30 or $2,500 with probability .70.Albert will choose the sure payment if

(Multiple Choice)

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Question 21

Billy has a von Neumann-Morgenstern utility function U(c)= c^1/2.If Billy is not injured this season, he will receive an income of 4 million dollars.If he is injured, his income will be only 10,000 dollars.The probability that he will be injured is .1 and the probability that he will not be injured is .9.His expected utility is

(Multiple Choice)

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Question 22

Sally Kink is an expected utility maximizer with utility function pu(c₁)+ (1 - p)u(c₂), where for any x < 6,000, u(x)= 2x, and for x greater than or equal to 6,000, u(x)= 12,000 + x.

(Multiple Choice)

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Question 23

Billy has a von Neumann-Morgenstern utility function U(c)= c^1/2.If Billy is not injured this season, he will receive an income of 25 million dollars.If he is injured, his income will be only 10,000 dollars.The probability that he will be injured is .1 and the probability that he will not be injured is .9.His expected utility is

(Multiple Choice)

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Question 24

Showing 21 - 24 of 24

Exam 11: Uncertainty-Part B

Sally Kink is an expected utility maximizer with utility function pu(c1)+ (1 - p)u(c2), where for any x < 6,000, u(x)= 2x, and for x greater than or equal to 6,000, u(x)= 12,000 + x.

Budget Constraint-Part A

Budget Constraint-Part B

Preferences-Part A

Preferences-Part B

Utility-Part A

Utility-Part B

Choice-Part A

Choice-Part B

Demand-Part A

Demand-Part B

Revealed Preference-Part A

Revealed Preference-Part B

Slutsky Equation-Part A

Slutsky Equation-Part B

Buying and Selling-Part A

Buying and Selling-Part B

Intertemporal Choice-Part A

Intertemporal Choice-Part B

Asset Markets-Part A

Asset Markets-Part B

Uncertainty-Part A

Risky Assets-Part A

Risky Assets-Part B

Consumers Surplus-Part A

Consumers Surplus-Part B

Market Demand-Part A

Market Demand-Part B

Equilibrium-Part A

Equilibrium-Part B

Auctions-Part A

Auctions-Part B

Technology-Part A

Technology-Part B

Profit Maximization-Part A

Profit Maximization-Part B

Cost Minimization-Part A

Cost Minimization-Part B

Cost Curves-Part A

Cost Curves-Part B

Firm Supply-Part A

Firm Supply-Part B

Industry Supply-Part A

Industry Supply-Part B

Monopoly-Part A

Monopoly-Part B

Monopoly Behavior-Part A

Monopoly Behavior-Part B

Factor Markets-Part A

Factor Markets-Part B

Oligopoly-Part A

Oligopoly-Part B

Game Theory-Part A

Game Theory-Part B

Game Applications-Part A

Game Applications-Part B

Behavioral Economics

Exchange-Part A

Exchange-Part B

Production-Part A

Production-Part B

Welfare-Part A

Welfare-Part B

Externalities-Part A

Externalities-Part B

Information Technology-Part A

Information Technology-Part B

Public Goods-Part A

Public Goods-Part B

Asymmetric Information-Part A

Asymmetric Information-Part B

Filters

Sally Kink is an expected utility maximizer with utility function pu(c₁)+ (1 - p)u(c₂), where for any x < 6,000, u(x)= 2x, and for x greater than or equal to 6,000, u(x)= 12,000 + x.