Suppose that there is a 10% chance Ja'Marr is sick and earns $10,000, and a 90% chance he is healthy and will earn $70,000. Suppose further that his utility function is the following (utility = square root of income) U (I) = VIncome Ja'Marr's utility from expected income is , and his expected utility of his income is 264.58; 100 248.12; 252.98 100; 265.58 O 252.98; 248.12
Suppose that there is a 10% chance Ja'Marr is sick and earns $10,000, and a 90% chance he is healthy and will earn $70,000. Suppose further that his utility function is the following (utility = square root of income) U (I) = VIncome Ja'Marr's utility from expected income is , and his expected utility of his income is 264.58; 100 248.12; 252.98 100; 265.58 O 252.98; 248.12
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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![Question 5
Suppose that there is a 10% chance Ja'Marr is sick and earns $10,000, and a 90% chance he is
healthy and will earn $70,000. Suppose further that his utility function is the following (utility =
square root of income)
U (I) = VIncome
Ja'Marr's utility from expected income is
, and his expected utility of his income is
264.58; 100
248.12; 252.98
100; 265.58
252.98; 248.12](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F1b56f076-eb9f-48b1-aebb-4105fb6ee259%2F98f299d8-81df-479a-b60e-deb6d691126d%2Ff70douq_processed.png&w=3840&q=75)
Transcribed Image Text:Question 5
Suppose that there is a 10% chance Ja'Marr is sick and earns $10,000, and a 90% chance he is
healthy and will earn $70,000. Suppose further that his utility function is the following (utility =
square root of income)
U (I) = VIncome
Ja'Marr's utility from expected income is
, and his expected utility of his income is
264.58; 100
248.12; 252.98
100; 265.58
252.98; 248.12
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