Scenario 27-1
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Lisa Has a Utility Function $$U = W ^ { 1 / 2 }$$

question 32

Essay

Scenario 27-1
​
Lisa has a utility function
$$U = W ^ { 1 / 2 }$$ where W is Lisa's wealth in millions of dollars and U is the utility she obtains.
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-Refer to Scenario 27-1. Suppose Lisa is faced with a choice between two options. With option A Lisa receives a guaranteed $9 million. With option B Lisa faces a lottery that pays $16 million with probability P and pays $4 million with probability (1-P). Given Lisa's utility function, how high does P need to be before Lisa will prefer option B?

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Definitions:

Constitutional Isomer

Molecules with the same molecular formula but different arrangements of atoms in space.

Empirical Formula

The simplest positive integer ratio of atoms present in a compound, not indicating the actual bonding of the atoms.

Formula Mass

The sum of the atomic masses of all atoms in a formula unit of a compound, usually measured in atomic mass units (amu).

Hybridization

The process of mixing atomic orbitals into new hybrid orbitals suitable for the pairing of electrons to form chemical bonds in molecular compounds.