(See Problem 11

question 6

Multiple Choice

(See Problem 11.) Jonas's expected utility function is , where p is the probability that he consumes c₁ and 1 - p is the probability that he consumes c₂. Jonas is offered a choice between getting a sure payment of $Z or a lottery in which he receives $3,600 with probability .10 or $6,400 with probability .90. Jonas will choose the sure payment if

• A) Z > 6,084 and the lottery if Z < 6,084.
• B) Z > 4,842 and the lottery if Z < 4,842.
• C) Z > 6,400 and the lottery if Z < 6,400.
• D) Z > 6,242 and the lottery if Z < 6,242.
• E) Z > 6,120 and the lottery if Z < 6,120.

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