Using the Following:
the Manager's Utility Function for Profit Is $\pi$

question 19

Multiple Choice

Using the following:
The manager's utility function for profit is U $\pi$ = 50 $\pi$ , where $\pi$ is the dollar amount of profit. The manager is considering a risky decision with the four possible profit outcomes shown below. The manager makes the following subjective assessments about the probability of each profit outcome:
$$\begin{array} { c c } \text { Probability } & \text { Profit outcome (\$) } \\\hline 0.20 & - \$ 15,000 \\0.30 & - \$ 5,000 \\0.30 & \$ 5,000 \\0.20 & \$ 25,000\end{array}$$
-What is the expected utility of profit?

• A) -2,500
• B) 5,000
• C) 15,000
• D) 30,000
• E) 100,000

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Definitions:

Left Hemisphere

The left side of the brain, typically associated with analytical tasks, such as language, logic, and mathematical calculations.

Right Hemisphere

The half of the brain that is typically associated with creative thinking, intuition, and spatial abilities.

Activities

Tasks or actions that are carried out by individuals, often for enjoyment, learning, or achieving a goal.

Phineas Gage

A railroad worker whose survival of a severe brain injury in the 19th century contributed significantly to the understanding of brain function and personality change.