Sally Kink Is an Expected Utility Maximizer with Utility Function

question 23

Multiple Choice

Sally Kink is an expected utility maximizer with utility function pu(c₁) + (1 - p) u(c₂) , where for any x < 6,000, u(x) = 2x, and for x greater than or equal to 6,000, u(x) = 12,000 + x.

• A)Sally will be risk neutral if her income is less than $6,000 and risk averse if her income is more than $6,000.
• B)Sally will be risk averse if her income is less than $6,000 but risk loving if her income is more than $6,000.
• C)For bets that involve no chance of her wealth exceeding $6,000, Sally will take any bet that has a positive expected net payoff.
• D)Sally will never take a bet if there is a chance that it leaves her with wealth less than $12,000.
• E)None of the above.

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Definitions:

Hybrid Sterility

A condition in hybrid animals or plants where they are unable to produce offspring due to genetic and chromosomal differences between the parents.

Hybrid Inviability

Hybrid inviability is a postzygotic barrier where hybrid offspring fail to survive to maturity, reducing the chances of genes being exchanged between different species.

Temporal Isolation

A mechanism of reproductive isolation in which two species breed at different times, preventing them from interbreeding.

Hybrid Breakdown

A postzygotic barrier where hybrid offspring have reduced survival or fertility rates.