Author Question: Mel's utility of wealth is 130 units at 3,000, 160 units at 5,000, and 190 units at 9,000. Starting ... (Read 65 times)

Evvie72 · **on:** Jun 29, 2018

Mel's utility of wealth is 130 units at 3,000, 160 units at 5,000, and 190 units at 9,000. Starting from zero wealth, he must choose between options A and B.

Option A gives him 5,000 for sure. Option B gives him 3,000 with probability 0.4 or 9,000 with probability 0.6. Mel
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

In the figure above, the firm's economic

A) loss will be greater than 30 per day.
B) loss will be 30 or less per day.
C) profit will be between 0 and 30 per day.
D) profit will be greater than 30.01 per day.