Sally Kink Is an Expected Utility Maximizer with Utility Function

question 1

Multiple Choice

Sally Kink is an expected utility maximizer with utility function pu(c₁) + (1 - p) u(c₂) , where for any x < $2,000, u(x) = 2x, and for x greater than or equal to $2,000, u(x) = 2,000 + x.

• A) For bets that involve no chance of her wealth exceeding $2,000, Sally will take any bet that has a positive expected net payoff.
• B) Sally will be risk averse if her income is less than $2,000 but risk loving if her income is more than $2,000.
• C) Sally will be risk neutral if her income is less than $2,000 and risk averse if her income is more than $2,000.
• D) Sally will never take a bet if there is a chance that it leaves her with wealth less than $4,000.
• E) None of the above are true.

Evaluate the difficulty in assessing the reliability of different sources.

Recognize the importance of currency and other characteristics of reliable information.

Critically assess information from websites, forums, and blogs.

Understand the distinction between primary and secondary research.