Jeff holds $50,000 wealth which has a utility of 7.07 utils (assuming utility is the square root of wealth in thousand dollars). He considers investing this in a gamble which has a 0.6 probability of increasing his total wealth to $100,000 and 0.4 probability of decreasing it to $30,000 . What will be Jeff's expected utility from the gamble?
a. 15 utils
b. 8.19 utils
c. 3.2 utils
d. 12.12 utils
B
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A) consumer; total B) consumer; consumer C) producer; producer D) producer; consumer E) total; consumer
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A) parity B) nontradable C) identical D) relative