ECON 212 Quiz: ECON 212quizQuiz 4 Section 002 Solution
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Econ 212 - winter 2017 - section 002 - quiz 4 - solution. 80% probability of , 000 in income and a 20% probability of , 000 in income. B gives him a 60% probability of , 000 in income and a 40% probability of , 000 in income. Pedro"s utility of income function is given by u = i 0. 4, where i is his income. For each lottery, calculate pedro"s expected utility of income. Next, compare the two expected utilities of income in order to determine pedro"s choice of lottery. Since eub(i) >eua(i), pedro will choose to play lottery b. 1. b. ) (3 points) suppose pedro has a sure income of , 000. A student"s calculation is marked according to the lottery that the student provides as the answer for question (1. a). If the student writes down lottery a as the answer for question (1. a), then the ta will mark the calculation based on lottery a.