(See Problem 11

question 20

Multiple Choice

(See Problem 11.) Pete's expected utility function is , where p is the probability that he consumes c₁ and 1 - p is the probability that he consumes c₂. Pete is offered a choice between getting a sure payment of $Z or a lottery in which he receives $1,600 with probability .80 or $14,400 with probability .20. Pete will choose the sure payment if

• A) Z > 3,136 and the lottery if Z < 3,136.
• B) Z > 8,768 and the lottery if Z < 8,768.
• C) Z > 14,400 and the lottery if Z < 14,400.
• D) Z > 2,368 and the lottery if Z < 2,368.
• E) Z > 4,160 and the lottery if Z < 4,160.

Recognize the fundamental elements required for the creation and failure of trusts.

Comprehend the importance of advance health directives and living wills in medical decisions.

Identify the legal implications of trustees' actions and state statutes on trust investment.

Explain the options available for individuals to manage their end-of-life care preferences.

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Definitions:

Allocation

The process of distributing resources, goods, or services in a particular way or to particular recipients.

Scarce Resources

Resources that are limited in supply and cannot fulfill all the uses and demands placed on them.

Virtually Unlimited

A term used to describe a resource or supply that is so abundant it appears to be almost without limit.

Scarcity and Choice

Refers to the fundamental economic problem of having unlimited human wants in a world of limited resources, leading to the necessity of making choices on how to allocate resources efficiently.