Suppose that Mira has a utility function given by U = 21 + 10√ī. She is are considering two job opportunities. The first job pays a salary of $40,000 for sure. The second job pays a base salary of $20,000 but offers the possibility of a $40,000 bonus on top of your base salary. She believes that there is a probability of p=0.50 that she will earn the bonus. What is the expected salary of the second job? Which offer gives Mira a higher expected utility? Based on this information we can conclude that Mira is
Suppose that Mira has a utility function given by U = 21 + 10√ī. She is are considering two job opportunities. The first job pays a salary of $40,000 for sure. The second job pays a base salary of $20,000 but offers the possibility of a $40,000 bonus on top of your base salary. She believes that there is a probability of p=0.50 that she will earn the bonus. What is the expected salary of the second job? Which offer gives Mira a higher expected utility? Based on this information we can conclude that Mira is
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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