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:

Productivity

Refers to the efficiency of production in terms of the amount of goods or services produced relative to the inputs used, such as labor and capital.

NLRA

The National Labor Relations Act, US legislation that protects the rights of employees to organize and to bargain collectively with their employers.

Global Market

An international economic system allowing goods, services, and capital to move across national borders, increasing market competition globally.

Mass Manufacturing

A production process characterized by the large-scale manufacture of standardized products, utilizing assembly lines and advanced technology to achieve high efficiency.