Author Question: Rhonda's utility of wealth is 65 units at 5,000, 80 units at 7,000, and 95 units at 10,000. Starting ... (Read 102 times)

james · **on:** Jun 29, 2018

Rhonda's utility of wealth is 65 units at 5,000, 80 units at 7,000, and 95 units at 10,000. Starting from zero wealth, she must choose between options A and B.

Option A gives her 7,000 for sure. Option B gives her 5,000 with probability 0.6 or 10,000 with probability 0.4. Rhonda
A) will choose A.
B) will choose B.
C) is indifferent between A and B.
D) needs more information to make a choice.

Question 2

The figure above shows a local lawn cutting service's demand for labor curve when the price of cutting an acre of lawn is 50 per acre. If the price of lawn cutting rises to 60 per acre of lawn cut, the firm's demand for labor curve

A) shifts rightward.
B) shifts leftward.
C) does not shift at all, but the firm moves upward along the curve.
D) None of the above because this change shifts the supply of labor curve.