Thelma Is Indifferent Between $100 and a Bet with a 0.6

question 44

Multiple Choice

Thelma is indifferent between $100 and a bet with a 0.6 chance of no return and a 0.4 chance of $200.If U(0) = 20 and U(200) = 220,then U(100) = :

• A) 88.
• B) 94.
• C) 100.
• D) 110.
• E) 132.

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Definitions:

Normal Good

A good for which demand increases as consumer income rises, holding all other factors constant.

Consumer Tastes

Preferences and inclinations of consumers that influence their purchasing behavior and choice of products.

Substitutes

Products or services that can replace each other in usage, providing consumers with choices.

Health Clubs

Facilities that offer a variety of exercise equipment, classes, and services to individuals looking to improve or maintain their physical fitness.