Pete's Expected Utility Function Is Pc^1/2₁ + (1 -P)c^1/2₂, Where

question 16

Multiple Choice

Pete's expected utility function is pc^1/2₁ + (1 -p) c^1/2₂, where p is the probability that he consumes c₁ and 1 - p is the probability that he consumes c₂.Pete is offered a choice between getting a sure payment of $Z or a lottery in which he receives $1,600 with probability .80 or $14,400 with probability .20.Pete will choose the sure payment if

• A)Z > 3,136 and the lottery if Z < 3,136.
• B)Z > 8,768 and the lottery if Z < 8,768.
• C)Z > 14,400 and the lottery if Z < 14,400.
• D)Z > 2,368 and the lottery if Z < 2,368.
• E)Z > 4,160 and the lottery if Z < 4,160.

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