(See Problem 11

question 5

Multiple Choice

(See Problem 11.) Lawrence's expected utility function is , where p is the probability that he consumes c₁ and 1 - p is the probability that he consumes c₂. Lawrence is offered a choice between getting a sure payment of $Z or a lottery in which he receives $400 with probability .30 or $2,500 with probability .70. Lawrence will choose the sure payment if

• A) Z > 1,040.50 and the lottery if Z < 1,040.50.
• B) Z > 2,500 and the lottery if Z < 2,500.
• C) Z > 2,090.50 and the lottery if Z < 2,090.50.
• D) Z > 1,681 and the lottery if Z < 1,681.
• E) Z > 1,870 and the lottery if Z < 1,870.

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Definitions:

Purported Partnership

The appearance of partnership when there is no partnership; it arises when a person misleads a second person into believing that the first person is a partner of a third person; a theory that allows the second person to recover from the first person all reasonable damages the second person has suffered due to his reliance on the appearance of partnership.

Constructive Partnership

A legal concept where a partnership is deemed to exist based on the actions or conduct of the parties, despite there being no formal agreement.

Actual Partnership

A type of business partnership that exists when two or more individuals engage in a business for profit with an express or implied agreement of partnership, as opposed to being legally deemed partners by the law.

Purported Partner

Implies someone alleged or claimed to be a partner in a business or enterprise, often without the legal or formal acknowledgment of such a partnership.