Suppose a Decision Maker Has a Utility Function $U = \sqrt { I }$

question 62

Multiple Choice

Suppose a decision maker has a utility function $U = \sqrt { I }$ and is faced with a lottery where there is a 30% chance of earning $30 and a 70% chance of earning $80. What is the expected utility of this lottery?

• A) 7.6
• B) 7.9
• C) 8.2
• D) 8.5

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Definitions:

Mental Activity

The cognitive processes of thinking, reasoning, problem-solving, and processing information.

Psychological Functions

Fundamental processes of the human mind, such as perception, memory, cognition, and emotion, that underlie human behavior and experience.

Interpreting Information

The process of understanding, analyzing, and making sense of data, symbols, or situations to form meaningful conclusions.

Critical Thinking

The ability to analyze facts to form a judgment. It includes the evaluation of sources, such as data, facts, observable phenomena, and research findings.