Refer to the information provided in Figure 17.1 below to answer the question(s) that follow.
Refer to Figure 17.1. John has two job offers when he graduates from college. John views the offers as identical, except for the salary terms. The first offer is at a fixed annual salary of $50,000. The second offer is at a fixed salary of $20,000 plus a possible bonus of $60,000. John believes that he has a 50-50 chance of earning the bonus. If John takes the offer that maximizes his expected utility and is risk-averse, which job offer will he choose?
◦ John will take the first offer.
◦ John will take the second offer.
◦ John is indifferent between the offers—both yield the same expected utility.
◦ Indeterminate from the given information.
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