X Pays a Yearly Salary of $55,000, Regardless of Thestate

question 197

Multiple Choice

X pays a yearly salary of $55,000, regardless of thestate of the economy. Job Y pays a yearly salary of$10,000 in a bad economy and $70,000 in a goodeconomy. The probability of a bad economy is 0.30.Which job would most people prefer?

• A)Job Y because the expected payoff of $80,000 is greater than $55,000.
• B)Job X because $55,000 exceeds the expected payoff of Job Y of $52,000.
• C)Job X because $55,000 exceeds the expected payoff of Job Y by $6,000.
• D)Job Y because the expected payoff of $70,000 is greater than $55,000.