Buck Columbus Is Thinking of Starting a Pinball Palace near a Large

question 10

Multiple Choice

Buck Columbus is thinking of starting a pinball palace near a large Midwestern university.Buck is an expected utility maximizer with a von Neuman-Morgenstern utility function, U(W) = 1 - (3,000/W) , where W is his wealth.Buck's total wealth is $12,000.With probability .2 the palace will be a failure and he'll lose $9,000, so that his wealth will be just $3,000.With probability .8 it will succeed and his wealth will grow to $x.What is the smallest value of x that would be sufficient to make Buck want to invest in the pinball palace rather than have a wealth of $12,000 with certainty?

• A)$75,000
• B)$14,250
• C)$36,000
• D)$48,000
• E)$15,000

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Definitions:

Therapeutic Touch

A holistic approach to healing that involves the manipulation of a person’s energy field to help balance their physical, emotional, and spiritual well-being.

Blocked Chakra

In certain spiritual traditions, a condition where the flow of energy through the body's chakras is obstructed, possibly affecting physical and emotional health.

Structural Imbalance

refers to a condition where there is an asymmetry or misalignment in the physical structure of the body, often leading to pain, dysfunction, or increased risk of injury.

Herbal Therapies

The use of plants and plant extracts to treat illnesses or maintain health, often part of traditional or alternative medicine practices.