Your Utility Function Is Given by U = M1/2

question 3

Multiple Choice

Your utility function is given by U = M1/2. You have a choice: take $100 in cash or flip a coin. If you flip a coin, the outcomes are as follows: heads, you win $225; tails, you win $49. You will

• A)take the $100 in cash.
• B)take the gamble.
• C)be indifferent between the cash and the gamble.
• D)it is impossible to say with the information given.

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