-Wendy Works as a Teller at a Bank for a Fixed

question 217

Essay

-Wendy works as a teller at a bank for a fixed salary of $1,800 per month. She is offered a job as a salesperson at which there is a 40 percent chance that she will make $5,000 a month and a 60 percent chance that she will make only $1,000 a month. The figure shows Wendy's utility of wealth curve:
a) What is Wendy's expected income from the offered job?
b) What is Wendy's expected utility from the offered job?
c) Will Wendy accept the offer? Why or why not?
d) What is the minimum fixed salary for which Wendy will continue to work for the bank and not take the sales job?

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Definitions:

Fine Motor Skill

The ability to use small muscle groups for precise movements, such as writing or manipulating small objects.

Perform A Somersault

The act of moving the body so it goes head over heels in a complete over-the-head flip, usually landing back on the feet.

Dodge A Ball

A physical activity or game where players try to avoid being hit by a ball thrown by opponents.

Feet Tall

A unit of measurement used to describe the height of an individual or object, equating to 12 inches.