A Decision Maker Has Chosen

question 20

Multiple Choice

A decision maker has chosen .4 as the probability for which he cannot choose between a certain loss of 10,000 and the lottery p(−25000) + (1 − p) (5000) .If the utility of −25,000 is 0 and of 5000 is 1,then the utility of −10,000 is

• A).5
• B).6
• C).4
• D)4

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Definitions:

Variable Expense

Costs that change in amount from one period to another, affected by various factors like usage or market conditions.

Recurring Expense

An ongoing financial cost that repeats at regular intervals, such as monthly or yearly.

Variable Expense

Costs or expenses that change in proportion to business activity.

Electric Bill

A monthly statement charging an individual or household for the consumption of electricity provided by a utility company.