After finishing high school, Klaus got a job selling towels to tourists in South Beach on the weekends. On a good weekend, he makes $450 and on bad ones, only $120. Assume good weekends and bad weekends are equally likely. If Klaus has a utility function u(x) = x0.5, what fixed salary with no risk would give him the same expected utility? a. $240.1 b. $246.5 c. $250.4 d. $258.7

After finishing high school, Klaus got a job selling towels to tourists in South Beach on the weekends. On a good weekend, he makes $450 and on bad ones, only $120. Assume good weekends and bad weekends are equally likely. If Klaus has a utility function u(x) = x0.5, what fixed salary with no risk would give him the same expected utility? a. $240.1 b. $246.5 c. $250.4 d. $258.7

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter7: Uncertainty

Section: Chapter Questions

Problem 7.5P

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