Refer to the Data Provided in Table 17 -Refer to Table 17

question 28

Multiple Choice

Refer to the data provided in Table 17.3 below to answer the following question(s) . The table shows the relationship between income and utility for Terri.
Table 17.3
$$\begin{array} { | r | c | } \hline \text { Income } & \text { Total Utility } \\\hline \$ 0 & 0 \\\hline \$ 20,000 & 10 \\\hline \$ 40,000 & 25 \\\hline \$ 60,000 & 45 \\\hline \$ 80,000 & 75 \\\hline\end{array}$$
-Refer to Table 17.3. Suppose Terri has a 25% chance of becoming disabled in any given year. If she does become disabled, she will earn $0. If Terri does not become disabled, she will earn her usual salary of $80,000. Terri has the opportunity to purchase disability insurance for $20,000 which will pay her her full salary in the event she becomes disabled. Terri's utility with the policy is ________ and her expected utility without the policy is ________.

• A) 56.25; 45
• B) 45; 56.25
• C) 45; 18.75
• D) 18.75; 37.5

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Definitions:

Push Inventory

A strategy where products are produced or supplied based on projected demand rather than actual customer orders.

Zero Inventories

An inventory management approach aimed at minimizing stock levels, often associated with Just-In-Time (JIT) manufacturing systems.