Pedro's Utility of Wealth Is 6 Units for $10,000 and 10

question 64

Multiple Choice

Pedro's utility of wealth is 6 units for $10,000 and 10 units for $20,000. A friend gave him a lottery ticket for his birthday. The ticket won, giving him either $10,000 with probability 0.5 or $20,000 with probability 0.5. Pedro's expected utility from the lottery ticket is

• A) between 6 and 8 units.
• B) equal to 8 units.
• C) between 8 and 10 units.
• D) equal to 10 units.

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The ability or capacity to influence or control the behavior of others or the course of events.

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