A Click Submit to complete this assessment. Question 5 Question 5 Save Answe Bestselling author A.W. Ryder is considering a lawsuit over a copyright infringement. If the case goes to trial, she believes she is more likely to win (60% chance), and she will then be entitled to $50OK in damages (the other side will have to reimburse the cost of her lawyers). If she loses, she will be left with $300K in legal expenses. There is also a strong possibility (80%) that it will turn out best to settle before a trial, and her lawyers think that the settlement would be for $250K (but she would still have $150K in legal expenses). Suppose A.W. Ryder's utility function for additional wealth w is either (1) u(w) sqrt(w) or (il) u(w) = w/10. A.W. Ryder also feels that taking the trouble to file the lawsuit has a disutility of -10 for her. Which is true? O A.W. Ryder prefers to file the lawsuit with utility function (1) and prefers not to file the lawsuit with utility function (). O A.W. Ryder prefers to file the lawsuit with utility function (1) and is indifferent with utility function (). O A.W. Ryder is indifferent with utility function () and prefers not to file the lawsult with utility function (i). O A.W. Ryder prefers not to file the lawsuit with utility function (i) and prefers to file the lawsuit with utility function (i).
A Click Submit to complete this assessment. Question 5 Question 5 Save Answe Bestselling author A.W. Ryder is considering a lawsuit over a copyright infringement. If the case goes to trial, she believes she is more likely to win (60% chance), and she will then be entitled to $50OK in damages (the other side will have to reimburse the cost of her lawyers). If she loses, she will be left with $300K in legal expenses. There is also a strong possibility (80%) that it will turn out best to settle before a trial, and her lawyers think that the settlement would be for $250K (but she would still have $150K in legal expenses). Suppose A.W. Ryder's utility function for additional wealth w is either (1) u(w) sqrt(w) or (il) u(w) = w/10. A.W. Ryder also feels that taking the trouble to file the lawsuit has a disutility of -10 for her. Which is true? O A.W. Ryder prefers to file the lawsuit with utility function (1) and prefers not to file the lawsuit with utility function (). O A.W. Ryder prefers to file the lawsuit with utility function (1) and is indifferent with utility function (). O A.W. Ryder is indifferent with utility function () and prefers not to file the lawsult with utility function (i). O A.W. Ryder prefers not to file the lawsuit with utility function (i) and prefers to file the lawsuit with utility function (i).
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Bestselling author A.W. Ryder is considering a lawsuit over a copyright infringement. If the case goes to trial, she believes she is more likely to win (60%
chance), and she will then be entitled to $500K in damages (the other side will have to reimburse the cost of her lawyers). If she loses, she will be left
with $300K in legal expenses. There is also a strong possibility (80%) that it will turn out best to settle before a trial, and her lawyers think that the
settlement would be for $250K (but she would still have $150K in legal expenses). Suppose A.W. Ryder's utility function for additional wealth w is either
(i) u(w) = sgrt(w) or (il) u(w) = w/10. A.W. Ryder also feels that taking the trouble to file the lawsuit has a disutility of -10 for her. Which is true?
O A.W. Ryder prefers to file the lawsuit with utility function (i) and prefers not to file the lawsuit with utility function (i).
O A.W. Ryder prefers to file the lawsuit with utility function (1) and is indifferent with utility function (i).
O A.W. Ryder is indifferent with utility function (1) and prefers not to file the lawsuit with utility function (i).
A.W. Ryder prefers not to file the lawsuit with utility function () and prefers to file the lawsuit with utility function (i)
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