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

question 25

Multiple Choice

Yoram'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.Wilbur is offered a choice between getting a sure payment of $Z or a lottery in which he receives $2,500 with probability .30 and $3,600 with probability .70.Wilbur will choose the sure payment if

• A)Z > 3,249 and the lottery if Z < 3,249.
• B)Z > 2,874.50 and the lottery if Z < 2,874.50.
• C)Z > 3,600 and the lottery if Z < 3,600.
• D)Z > 3,424.50 and the lottery if Z < 3,424.50.
• E)Z > 3,270 and the lottery if Z < 3,270.