Hudson has two job offers when he graduates from college. Hudson views the offers as identical, except for the salary terms. The

Question

3 years ago

10

Hudson has two job offers when he graduates from college. Hudson views the offers as identical, except for the salary terms. The

first offer is at a fixed annual salary of $45,000. The second offer is at a fixed salary of $25,000 plus a possible bonus of $40,000. Hudson believes that he has a 50-50 chance of earning the bonus. If Hudson takes the offer that maximizes his expected utility and he is risk-neutral, then A) he will take the first offer

Business

1 answer:

WINSTONCH [101] · Answer 1 · 2022-07-02T14:23:27+03:00

Answer:

B. he will take the second offer

Explanation:

Based on the information given in a situation where he takes the offer that help maximizes his expected utility which is the satisfaction he will derived from the service he want to rendered to his employer in which the offer is also risk-neutral due to the likely gain he will derived from rendering service then HE WILL TAKE THE SECOND OFFER reason been that the second offer has fixed salary of the amount of $25,000 including a possible bonus of the amount of $40,000 compare to the first offer which had only a fixed annual salary of the amount of $45,000.