ECON 212 Quiz: ECON 212quizQuiz3 Section001-Solution-140316
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ECON 212 Full Course Notes
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Econ 212 - microeconomic theory i - winter 2016 - section 1. With lottery a, there is a 0. 90 chance that you receive a payoff of sh and a 0. 10 chance that you receive a payoff of . V ar [a] = 0. 90 [sh e [a]]2 + 0. 10 [ e [a]]2. = 0. 90 [sh 40]2 + 0. 10 [ 40]2 = 14, 400. E [a] = 0. 90 sh + 0. 10 = 40. E [b ] = 0. 50 + 0. 50 = 40. V ar [b ] = 0. 50 [ e [b ]]2 + 0. 50 [ e [b ]]2. = 0. 50 [ 40]2 + 0. 50 [ 40]2 = 100 (1) (2) (3) (4) (5) (6) (7: suppose that your utility function is u = pi + 500. E [u (a)] = 0. 90 psh + 500 + 0. 10 p + 500 = 23. 1246. E [u (b )] = 0. 50 p + 500 + 0. 50 p + 500 = 23. 2369 (8) (9)
