(See Problem 11

question 9

Multiple Choice

(See Problem 11.) Albert's expected utility function is , where p is the probability that he consumes c₁ and 1 - p is the probability that he consumes c₂. Albert 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. Albert will choose the sure payment if

• A) Z > 2,090.50 and the lottery if Z < 2,090.50.
• B) Z > 1,040.50 and the lottery if Z < 1,040.50.
• C) Z > 2,500 and the lottery if Z < 2,500.
• 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:

Business Knowledge

Understanding of the aspects and functions of businesses, including management, operations, finance, and marketing.

Empower Others

The act of giving others the authority, means, and confidence to take initiative and make decisions within their roles or tasks.

Close Supervision

The practice of overseeing subordinates' work and tasks closely to ensure compliance and performance standards are met.

Take Initiative

The act of taking the first step or move in a situation without waiting for others to act.