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

question 24

Multiple Choice

Quincy'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 $3,600 with probability .60 and $12,100 with probability .40.Wilbur will choose the sure payment if

• A)Z > 6,400 and the lottery if Z <6,400.
• B)Z > 12,100 and the lottery if Z < 12,100.
• C)Z > 9,250 and the lottery if Z < 9,250.
• D)Z > 5,000 and the lottery if Z <5,000.
• E)Z > 7,000 and the lottery if Z < 7,000.

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The annual shortfall where the government's expenditures exceed its revenues, contributing to the national debt.