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Author Question: Diminishing Marginal Utility and Expected UtilityThe graph shows the relationship between income and ... (Read 66 times)

redpassion

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Diminishing Marginal Utility and Expected Utility

The graph shows the relationship between income and utility for Ahab.
 
Assume that U1=170, U2=187, U3=243, U4=255, I1=$29,000, I2=$35,000, I3=$59,000, and I4=$65,000.
Suppose Ahab is offered two different jobs. For the first job, he will earn $35,000 a year. For the second job, he has a 30% chance of earning $29,000 a year and a 70% chance of earning $59,000 a year. What is the expected value of the second job? What is the expected utility of the second job?
Please round your final answer to two decimal places.
◦ $38,000.00, 221.10
◦ $50,000.00, 191.90
◦ $38,000.00, 191.90
◦ $50,000.00, 221.10


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Marked as best answer by redpassion on Nov 23, 2022

ad2018

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redpassion

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Reply 2 on: Nov 23, 2022
Thanks for the timely response, appreciate it


bulacsom

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Reply 3 on: Yesterday
Excellent

 

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