• You offer a lottery ticket {$64, .125}, i.e., 12.5% to win $64 or nothing, to three persons with different utility functions. What maximum price (Pm) each person is willing to pay? Show the solution steps. Person 1 U = x13 1/3 P" = Person 2 U = .3X p" = Person 3 U=x pm = %3D
• You offer a lottery ticket {$64, .125}, i.e., 12.5% to win $64 or nothing, to three persons with different utility functions. What maximum price (Pm) each person is willing to pay? Show the solution steps. Person 1 U = x13 1/3 P" = Person 2 U = .3X p" = Person 3 U=x pm = %3D
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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![• You offer a lottery ticket {$64, .125}, i.e., 12.5% to win $64 or nothing, to three persons with
different utility functions. What maximum price (Pm) each person is willing to pay? Show the
solution steps.
Person 1
U =x13
P" =
Person 2
U = .3X
P" =
Person 3
U=x°
p" =
%3D](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fccbb07df-3ad4-4195-9f7b-3931440f48e9%2F8b8e2a9d-deb0-4432-bd25-e83f521d8fd1%2Fqicjso_processed.jpeg&w=3840&q=75)
Transcribed Image Text:• You offer a lottery ticket {$64, .125}, i.e., 12.5% to win $64 or nothing, to three persons with
different utility functions. What maximum price (Pm) each person is willing to pay? Show the
solution steps.
Person 1
U =x13
P" =
Person 2
U = .3X
P" =
Person 3
U=x°
p" =
%3D
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