**Practice** I have been trying to practcie this question but I always seem to get it wrong What is the expected final wealth of each agent? Pay attention to the names in each option!A. Anna’s expected final wealth is 1440 and Bob’s expected final wealth is 980B. Anna’s expected final wealth is 1020 and Bob’s expected final wealth is 1380C. Anna’s expected final wealth is 1460 and Bob’s expected final wealth is 1105D. Anna’s expected final wealth is 1140 and Bob’s expected final wealth is 1200E. None of the options above =Anne has initial wealth of $1600 and Bob has initial wealth of $1225. For each of them, there isa probability > 0.2 that their phones will be stolen. If a cell phone is stolen, they will have touse some of their money to buy another one of the same model. Anne's smartphone costs $700and Bob's smartphone costs $600. The risks for each agent are independent. Both agents' utilityfunctions are given by u(w) = √√w. You may use the following facts if necessary:X x2Xx²хx2x x21010020 4003090040 16001112121 4413196141 16811214422 48432102442 17641316923 52933108943 184914 19624 57634115644193615 22525 62535122545 202516 25626 67636129646 211617 28927 72937 136947 220918 32428 78438 144448 230419 36129 84139 152149 2401For example, if you want to know what is √1089, the answer is found in the third column: it is33, since 332 = 1089.

The expected value of wealth is calculated in situations of uncertainty. When future events are not…

Answered: **Practice** I have been trying to…

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter7: Uncertainty

Section: Chapter Questions

Problem 7.3P

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**Practice** I have been trying to practcie this question but I always seem to get it wrong

What is the expected final wealth of each agent? Pay attention to the names in each option!
A. Anna’s expected final wealth is 1440 and Bob’s expected final wealth is 980
B. Anna’s expected final wealth is 1020 and Bob’s expected final wealth is 1380
C. Anna’s expected final wealth is 1460 and Bob’s expected final wealth is 1105
D. Anna’s expected final wealth is 1140 and Bob’s expected final wealth is 1200
E. None of the options above

=
Anne has initial wealth of $1600 and Bob has initial wealth of $1225. For each of them, there is
a probability > 0.2 that their phones will be stolen. If a cell phone is stolen, they will have to
use some of their money to buy another one of the same model. Anne's smartphone costs $700
and Bob's smartphone costs $600. The risks for each agent are independent. Both agents' utility
functions are given by u(w) = √√w. You may use the following facts if necessary:
X x2
X
x²
х
x2
x x2
10
100
20 400
30
900
40 1600
11
121
21 441
31
961
41 1681
12
144
22 484
32
1024
42 1764
13
169
23 529
33
1089
43 1849
14 196
24 576
34
1156
44
1936
15 225
25 625
35
1225
45 2025
16 256
26 676
36
1296
46 2116
17 289
27 729
37 1369
47 2209
18 324
28 784
38 1444
48 2304
19 361
29 841
39 1521
49 2401
For example, if you want to know what is √1089, the answer is found in the third column: it is
33, since 332 = 1089.

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