Melanie Must Choose Between Two Jobs

question 15

Multiple Choice

Melanie must choose between two jobs. With job A, there is a 10% chance of earning $60,000 per year and a 90% chance of earning $50,000. With job B, there is a 50% chance of earning $46,000 and a 50% chance of earning $56,000. If Melanie is risk averse (U(W) = W^1/2) , which job will she choose?

• A)job B
• B)her preferences violate the axioms of expected- utility theory.
• C)job A
• D)she is indifferent between the two jobs

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Definitions:

Socialization

The process by which individuals learn and adopt the norms, values, and behaviors appropriate to their society or social group.

Society

A large group of individuals living together in a more or less ordered community, often sharing common cultural and social norms.

Culture

The set of beliefs, practices, arts, customs, and social behavior of a particular nation or people.

Socialization

The process by which individuals learn and adopt the norms, values, behaviors, and social skills appropriate to their society.