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konstantin123 [22]
3 years ago
5

Nina has a convex utility of wealth function, u(x). She is contemplating two prospects, L and M, where L is a mean preserving sp

read of M. Which of the following statements is therefore true?
a. Nina will prefer M to L.
b. Nina will prefer L to M.
c. Ninaâs ranking of L and M cannot be determined without more information.
d. Nina must be risk averse, but that is the most one can say.
Business
1 answer:
Lerok [7]3 years ago
6 0

Answer:

b. Nina will prefer L to M.

Explanation:

Convex utility of wealth indicates that an individual tends to be comfortable with taking risks.

A concave utility function shows an aversion for risk.

A mean preserving spread occurs when one variable has greater variance than another but they both have the same mean.

In the given scenario prospect L will have a greater variance than prospect M since it is a mean preserving spread.

Given Nina's risk taking preference she will most likely take prospect L that offers more variability over prospect M

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You are offered two jobs, one in Chicago paying $67,000 and one in Dallas paying $58,000. The price index in Chicago is 110.8, a
Sergeu [11.5K]

Answer:

you definitely take the job in Dallas because the real wage is higher there.

Explanation:

given data

Chicago paying = $67,000

Dallas paying = $58,000

price index in Chicago = 110.8

price index in Dallas = 91.5

solution

we get here Real wage in Chicago that is

Real wage in Chicago = 67000 × \frac{100}{110.8}  

Real wage in Chicago = $60469

and

Real wage in Dallas is  

Real wage in Dallas = 58000 × \frac{100}{91.5}  

Real wage in Dallas = $63388

so you definitely take the job in Dallas because the real wage is higher there.

6 0
3 years ago
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liubo4ka [24]

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4 years ago
Equipment is a(n) _____________ account. It is reported on the _____________ side of the accounting equation and is ____________
Stella [2.4K]

Answer:

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3 0
3 years ago
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liberstina [14]

Answer:

<h2>The specific identification method</h2>

a) matches each unit of inventory with its actual cost

d) would be beneficial to a company that makes fine jewelry

Explanation:

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4 years ago
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daser333 [38]

Answer:

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