1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
zlopas [31]
3 years ago
10

Jamal has a utility function u=w12, where w is his wealth in millions of dollars and u is the utility he obtains from that wealt

h. in the final stage of a game show, the host offers jamal a choice between (a) $4 million for sure, or (b) a gamble that pays $1 million with probability 0.6 and $9 million with probability 0.4.
Business
2 answers:
Zielflug [23.3K]3 years ago
8 0

Answer:

The expected value of both offers are:

Offer A's expected price = $4 million

Offer B's expected price = ($1 million x 0.6) + ($9 million x 0.4) = $4.2 million

Jamal's utility function U = W¹/²  or  U = √W

Offer A's expected utility = √$4,000,000 = 2,000 utils

Offer B's expected utility = √$4,200,000 = 2,049 utils

Both the difference in expected value and utility is not that large, but the difference in risk is great, so if I was Jamal I would choose option A.

GREYUIT [131]3 years ago
6 0

Answer: Jamal Should choose option B

Explanation:

The question is unclear with regards to the requirements, we will assume the question wants us to find an option that will maximize jamal's wealth.

Utility Function reflects Jamal's satisfaction that he derives from his wealth.

U = w12

a. Wealth (w) = $4million

U = 12w = (4000 000) x 12

U = 48000 000

b. Wealth =  $1 million with probability 0.6 and $9 million with probability 0.4.

We first need to calculate expected wealth before we can calculate how much utility will Jamal derive from this option

Expected Utility = 1 000 000 x 0.4 + 9000 000 x 0.4 = $4200 000

Utility = w12 = (4200 000) x 12 = 50 400 000

Jamal will have a utility of 48000 000 if he chooses option A and Option B provides Jamal with a Utility of 50 400 000. Option B provides a higher utility than option A, therefore the option that will maximize Jamal's Utility is Option B.

You might be interested in
A Disability Income policyowner suffers a disability which was due to the same cause as a previous disability. Both disabilities
Luba_88 [7]

Answer:

C) Recurrent Disability provision

Explanation:

The human body is a fantastic machine but sometimes when you have health problems they don't show up immediately.

For example you might get hit on the right side of your head severely and lose partial hearing from your right ear, but in a couple months you might notice that your short term memory has also been affected. Both disabilities were caused by the injury although one showed up before the other.

The insurance company has to provide the disability benefits without a new elimination period under the recurrent disability provision.

8 0
3 years ago
Diana is a customer of Apexoria Bank, which is not a member of the FDIC. She currently has a checking account with $11,000 in it
Stella [2.4K]
<span>The answer is A.$0 Since, the Apexoria Bank is not a member of FDIC, no money of Diana is FDIC protected.</span>
7 0
3 years ago
Read 2 more answers
A company has three divisions and three conference rooms for meetings. To keep track of the use of their facilities, for each me
AleksandrR [38]

Answer:

c) the lenght of time for the meeting

Explanation:

A quantitative variable is a variable that can be stated as numbers. According to this, the answer is that the variable that is quantitative is the lenght of time for the meeting.

The other options: the division holding the meeting and conference room for the meeting are variables that are not numerical and are known as qualitative variables.

4 0
3 years ago
Read 2 more answers
A physical item that can be touched is called
Anestetic [448]

Answer:

Persom

Explanation:

5 0
3 years ago
5) You purchased a 3D printer for $60,000 that you expect to print 12,000 parts over its lifetime. You printed 2,000 parts in th
Iteru [2.4K]

Answer:

Depreciation for the first year is $10,000

Explanation:

Unit production method is the depreciation method which is based on the output per year of the asset. The asset is depreciated by the ratio of the output for the year to the output expected over whole useful life.

Cost of printer = $60,000

Expected output = 12,000 prints

Prints in the first year = 2,000

Depreciation for the year = Total cost x output for the year / expected output over useful life

Depreciation for the first year = $60,000 x 2,000 / 12,000

Depreciation for the first year = $60,000 x 1/6

Depreciation for the first year = $10,000

4 0
3 years ago
Other questions:
  • During the recent economic crisis, many financial managers and corporate officers have been criticized for (a) poor decisions, (
    5·1 answer
  • TB MC Qu. 3-209 Chavez Corporation reported the ... Chavez Corporation reported the following data for the month of July: Invent
    14·1 answer
  • A coupon bond that pays semiannual interest is reported in the Wall Street Journal as having an ask price of 117% of its $1,000
    13·1 answer
  • Organizations that are formed to offer services to clients and not make a profit are ____, whereas, ________ are those organizat
    10·1 answer
  • Last year mike bought 100 shares of dallas corporation common stock for $53 per share. during the year he received dividends of
    9·1 answer
  • If the unemployment rate falls below its long-run level, which policies would be appropriate to stabilize output? a. increase th
    10·1 answer
  • Hannah posts her résumé on the websites of several companies. Unfortunately, it is poorly formatted and contains several spellin
    6·1 answer
  • Physical or mental injuries caused by a crime are known as what?
    12·2 answers
  • Match each entity on the left to the correct establishment on the right.
    8·1 answer
  • What is the future value of a 500 annuity payment over wight years if interest rates are 14 percent?
    9·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!