Author Question: Nick has two job offers, one as a financial planner and one as an economist for a regional bank. The ... (Read 28 times)

abarnes · **on:** Jun 29, 2018

Nick has two job offers, one as a financial planner and one as an economist for a regional bank. The income that Nick would expect to earn as a financial planner depends how effective he is in getting clients.

He estimates that he would receive either 80,000 and a utility of 75, with a probability of .50, or he would earn 30,000 and a utility of 35, with a probability of .50. The economist job would pay 45,000 per year and has a utility of 55. To maximize his expected utility, which job should Nick take? A) Nick is indifferent between the two jobs.
B) Nick is better off if he takes the economist job.
C) Nick is better off if he takes the job of financial planner.
D) Nick should look around for another job.

Question 2

In the figure above, if the quantity is restricted to 2, then the deadweight loss in this market equals

A) b + g.
B) c + d.
C) e + k.
D) h + i.