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- Show that a decision maker who has a linear utilityfunction will rank two lotteries according to their expectedvalue.Select the correct option : When the expected utility of offer A is larger than offer B, a rational individual would always prefer offer A to offer B. 1. True 2.FalseTrue or false. Maximizing choices occur when combinations of two goods are made such that they are affordable and achieve the highest indifference curve (i.e. the highest utility).
- how then can we find the total utility given q1=24, q2=30 and q3=15Emma has a utility functionU(x1, x2, x3) = logx1+ 0.8logx2+ 0.72logx3 incomes x1 , x2, x3 in the next three years. This is an example of (A) expected value; (B) quasi-hyperbolic utility function; (C) standard discounted utility; (D) none of the above.Ms. Beauty's incremental benefit per day from drinking soda is given in the following scenarios. She values the first soda she drinks at P120, the second at P115, the marginal benefit for 3 soda is P95 and finally the marginal benefit for 4 soda is P60. If the price of soda is P100, the optimal number of soda that Ms. Beauty should drink is: *
- If u(x1, x2) = x1 + x2 represents the individual's preferences, then V(x1, x2) = -1/(x1 + x2) also represents the individual's preferences. True, Uncertain or False?True/False Marginal utility refers to the satisfaction or pleasure that occur due to the additional consumption of one more unitAssume that a∈[-1,1] and θ∈(0,2). The utility function is given by u(a,θ)=a(θ-1). Which of the following action is never optimal ex-post? a. 0 b. All can be optimal ex-post c. 1 d. -1