Which is the expected utility of wealth. beatrix has 109 of, Ask an Expert

Economics

Beatrix has $109 of wealth. She is contemplating a gamble that gives her a 0.25 probability of winning $180 and a 0.75 probability of losing $60. Her utility function is: U(M) = ln(M)

1. Which is the expected value of her wealth?

2. Which is the expected utility of wealth?

3. Is Beatrix risk averse? Explain you answer using a graph.

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