-Ashton Has the Utility of Wealth Curve Shown in the Above

question 228

Multiple Choice

-Ashton has the utility of wealth curve shown in the above figure. He owns a sports car worth $30,000, and that is his only wealth. Ashton is a careless driver and there is a 30 percent chance that he will have an accident within a year. If he does have an accident, his car is worthless. Ashton would have the same expected utility as he currently has if his wealth was ________ and he faced no uncertainty.

• A) $30,000
• B) $21,000
• C) $12,000
• D) $9,000

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Definitions:

Horse Stable Inc.

A hypothetical or specific company involved in maintaining buildings or establishments for the care, feeding, and training of horses.

Fully Integrated

A term indicating that all components of a system, process, or agreement are completely unified and functioning as a single entity.

Buyers Store

A retail or online establishment where consumers purchase goods, often referring specifically to the entity in the context of a supply chain or distribution channel.

Usage of Trade

Established practices and patterns of behavior commonly observed and accepted in a particular industry.