Pat's Utility Function Is U(y)= Y^1/2 and His Income Is

question 22

Multiple Choice

Pat's utility function is u(y) = y^1/2 and his income is $100. He is offered a gamble paying $300 with probability 1/2 and $0 with probability 1/2. What is the certainty equivalent of this gamble?

• A)100
• B)150
• C)50
• D)75

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Definitions:

Extremities

The furthest points or outermost parts of the human body, often referring to the arms and legs.

Hip And Chest

Refers to the body regions of the hip, involved in lower body movement, and the chest, containing vital organs such as the heart and lungs.

Formal Operations

A stage in cognitive development, according to Piaget, where individuals are able to think abstractly, logically, and systematically.

Cognitive Development

The progression of thought processes in individuals, including remembering, problem solving, and decision-making, from childhood through adulthood.