Hudson has two job offers when he graduates from college. Hudson views the offers as identical, except for the salary terms. The first offer is at a fixed annual salary of $45,000. The second offer is at a fixed salary of $25,000 plus a possible bonus of $40,000. Hudson believes that he has a 50-50 chance of earning the bonus. If Hudson takes the offer that maximizes his expected utility and he is risk-loving, then
A. he will take the first offer.
B. he will take the second offer.
C. he is indifferent between the offers-both yield the same expected utility.
D. Indeterminate from the given information-we cannot say what he will do.
Answer: B
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A property tax discourages improvements that would increase the value of the property
a. True b. False
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