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Q1) Shaqueena's utility function is given by U= I1/2, where I signifies annual income in thousands of dollars.

a. Is Shaqueena risk loving, risk neutral or risk averse?

b. Assume Shaqueena is presently earning income of $23,000 (I =23) and can earn that income next year with certainty. She is offered a chance to take new job that offers 0.5 probability of earning $25000 and 0.5 probability of earning $16000. Must she take new job?

Microeconomics, Economics

  • Category:- Microeconomics
  • Reference No.:- M923040

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