2. Workers in a certain factory are facing uncertain conditions regarding their employment. With 0.5 probability they can work 1,000 hours in a year and with 0.5 probability they can work 2,500 hours. The wage rate is $10/hour. Draw the utility functions below on a graph. Mark worker's employment possibilities. Explain whether the individuals are risk averse, risk neutral, or risk lover. a. U = √Income b. U = Income c. U = Income²

2. Workers in a certain factory are facing uncertain conditions regarding their employment. With 0.5 probability they can work 1,000 hours in a year and with 0.5 probability they can work 2,500 hours. The wage rate is $10/hour. Draw the utility functions below on a graph. Mark worker's employment possibilities. Explain whether the individuals are risk averse, risk neutral, or risk lover. a. U = √Income b. U = Income c. U = Income²

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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