Suppose a Family Has Saved Enough for a 10 Day

question 2

Multiple Choice

Suppose a family has saved enough for a 10 day vacation (the only one they will be able to take for 10 years) and has a utility function U = V^1/2 (where V is the number of healthy vacation days they experience) .Suppose they are not a particularly healthy family and the probability that someone will have a vacation-ruining illness (V = 0) is 20%.What is the expected value of V?

• A) 10
• B) 8
• C) 2
• D) 0

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Definitions:

Scientific Management

A management theory developed by Frederick W. Taylor aiming to improve economic efficiency and labor productivity through systematic study of workflows and tasks.

Flexible Specialization

A production approach emphasizing the adaptability and agility of firms and labor to shifting markets and production processes, often through the use of technology and skilled workforce.

Team-Oriented

A mentality and approach that emphasizes collaboration and teamwork among members to achieve common goals.

Flatter Structures

Organizational structures with fewer hierarchical levels, encouraging more direct communication and collaboration between employees and higher-level management.