Table: Choice with UncertaintyNorman, a high school English teacher, is trying to decidewhether to leave his job to work as a writer for a proposedtelevision sitcom. His teaching job pays $40,000 per year and heis guaranteed $25,000 for the first year whether or not the sitcommakes it to television, $50,000 if it makes it to television but isnot the most viewed show in its time slot, and $100,000 if itmakes it to television and is the most viewed show in its timeslot. Norman wants to maximize his total utility and his utilityfunction as shown in the table.Income$ 25,00030,00035,00040,00045,00050,00055,00060,00065,000100,000Total Utility (in utils)1,5001,9002,2502,5502,8003,0003,1503,2503,3003,500(Table: Choice with Uncertainty) UseTable: Choice with Uncertainty. Supposethat the probability that the sitcom doesnot make it to television is 50%, that itmakes it to television but is not the mostviewed show in its time slot is 30%, andthat it makes it to television and is themost viewed show in its time slot is 20%.Given this information, Norman, as autility maximizer:O a. should quit his teaching job and go to Hollywood.will be indifferent between leaving and staying because his expected total utility is the same whether he stays ab. teacher or moves to Hollywood.will be indifferent between leaving and staying because his expected income is the same whether he stays aO c. teacher or moves to Hollywood.Od. should keep his teaching job.

Given information: Norman is a high school English teacher, and his teaching job pays $40,000 per…

hoice Norman, a high school English teacher, is trying to decide whether to leave his job to work as a writer for a proposed television sitcom. His teaching job pays $40,000 per year and he is guaranteed $25,000 for the first year whether or not the sitcom makes it to television, $50,000 if it makes it to television but is not the most viewed show in its time slot, and $100,000 if it makes it to television and is the most viewed show in its time slot. Norman wants to maximize his total utility and his utility function as shown in the table. Total Utility (in utils) Income

hoice Norman, a high school English teacher, is trying to decide whether to leave his job to work as a writer for a proposed television sitcom. His teaching job pays $40,000 per year and he is guaranteed $25,000 for the first year whether or not the sitcom makes it to television, $50,000 if it makes it to television but is not the most viewed show in its time slot, and $100,000 if it makes it to television and is the most viewed show in its time slot. Norman wants to maximize his total utility and his utility function as shown in the table. Total Utility (in utils) Income

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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