ECON 212 Quiz: ECON 212quizquiz3c.w04
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[5 marks] consider two lotteries, a and b . With lottery a , there is a 20- percent chance that you will receive , a 50-percent chance that you will receive , and a 30-percent chance that you will receive . Both lotteries have an expected value of 39. var var. Lottery a has a higher variance than lottery b : [2. 5 marks] suppose that your utility function is utility for each lottery. In general, when two lotteries have the same expected value but different variances, a risk-averse decision maker will have a higher expected utility for the lottery with the lower variance, lottery b in this case. 1: [2. 5 marks] what is the equation of the isoquant corresponding to. To find the equation of the isoquant, solve the production function for k in terms of l . Perform the same exercise as in part a) leaving q as a variable.