Use the Following to Answer Question

question 120

Multiple Choice

Use the following to answer question:
-(Table: Amy's Utility Function) Use Table: Amy's Utility Function.Amy is an entrepreneur with current income equal to $40,000.Amy is considering development of a new product.The probability that her new product earns Amy $10,000 in additional income is 0.5,and the probability that Amy incurs a reduction of $10,000 from her current income is also 0.5.Suppose Amy can buy a fair insurance policy that will compensate her for any losses.Amy's premium will be _____,her guaranteed income will be _____,and her expected utility will be _____ utils.

• A)$5,000;$10,000;200
• B)$10,000;$30,000;500
• C)$10,000;$40,000;620
• D)$30,000;$50,000;720

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