The Manager's Utility Function for Profit Is U $\pi$ )= 10 Ln

question 49

Multiple Choice

The manager's utility function for profit is U $\pi$ ) = 10 ln $\pi$ ) ,where $\pi$ is the dollar amount of profit.The manager is considering a risky decision with the four possible profit outcomes shown below.The manager makes the following subjective assessments about the probability of each profit outcome: What is the expected utility of profit?

• A)97
• B)245
• C)462
• D)974
• E)1,033

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Definitions:

Change in Price

A variation in the cost of a good or service over a period which can affect demand and supply dynamics in the market.

Price of X

The amount of money required to purchase a specified good or service, indicated here as "X."

Buyer's Budget

The total amount of money that a consumer is willing and able to spend on goods and services within a certain period.

Indifference Curve

A graph representing different bundles of goods between which a consumer is indifferent, showing preferences in terms of trade-offs.