Marylou, whose utility of wealth curve is shown in the figure above, faces two options. Option A yields her $200 for sure. Option B has a 0.4 probability of yielding $100 and a 0.6 probability of yielding $300. Marylou
A) picks option A.
B) picks option B.
C) is indifferent between option A and option B.
D) needs more information to make a choice.
A
You might also like to view...
Refer to the figure above. Which indifference curve depicts the highest level of utility?
A) IC1 B) IC2 C) IC3 D) IC4
Mezzanine debt funds hold quite __________ assets issued by __________ companies
A) risky; small to midsized B) risky; large C) safe; small to midsized D) safe; large
Four possibilities have probabilities 0.4, 0.2, 0.2 and 0.2 and values $40, $30, $20, and $10 respectively. The expected value is:
a. $22 b. $24 c. $26 d. $28
Consider firms operating in an industry where the own price elasticity of demand is infinite; that is, EQ,P = -?. Use this information to determine the type of industry in which these firms operate and the optimal advertising-to-sales ratio.
A. Monopolistic industry and 0 B. Perfectly competitive industry and 0 C. Perfectly competitive industry and ? D. Monopolistically competitive industry and ?