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:

Selective Perception

The process by which individuals perceive what they want to in media messages while ignoring opposing viewpoints due to personal attitudes and beliefs.

Stroboscopic Perception

The visual phenomenon where continuous motion is represented by a series of short or instantaneous samples, as seen in motion pictures.

Cognitive Restructuring

A therapeutic process that aims to change negative or irrational thought patterns to more positive and realistic ones.

Müller-Lyer Illusion

A visual illusion where two lines of the same length appear to be of different lengths due to the orientation of arrow-like figures at the ends.