Amy has a utility function U(Y) = YO5, where Y is income. Amy faces an opportunity to invest her savings of $100,000. There is a 90% chance for her to earn $1,600, and a 10% chance for her to earn $6,400. What is her expected utility from this investment opportunity? %3D Select one: OA. 46 O B. 44 С. 45.61 O D. 49.19

Amy has a utility function U(Y) = YO5, where Y is income. Amy faces an opportunity to invest her savings of $100,000. There is a 90% chance for her to earn $1,600, and a 10% chance for her to earn $6,400. What is her expected utility from this investment opportunity? %3D Select one: OA. 46 O B. 44 С. 45.61 O D. 49.19

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Jin's Utility Function Wealth Utility (Dollars) 60,000 4,000 61,000 4,110 62,000 4,209 63,000 4,288 Refer to Table 27-1. If Jin's current wealth is $61,000, then O his gain in utility from gaining $1,000 is less than his loss in utility from losing $1,000. Jin is not risk averse. O his gain in utility from gaining $1,000 is greater than his loss in utility from losing $1,000. Jin is not risk averse. O his gain in utility from gaining $1,000 is greater than his loss in utility from losing $1,000. Jin is risk averse. his gain in utility from gaining $1,000 is less than his loss in utility from losing $1,000. Jin is risk averse.
Amy has a utility function U(Y) = Y5 where Y is income. Amy faces an opportunity to invest her savings of $100,000. There is a 85% chance for her to ean $1,600, and a 15% chance for her to earn $6,400. What is her expected utility from this investment opportunity? Select one: OA. 49.19 B. 44 Oc. 48.17 D. 46
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