Natasha has utility function u(I) = (10*1)0.5, where I is her annual income (in thousands). (a) Is she a risk loving, risk averse or risk neutral individual? She is [Select] as her utility function is [Select ] 9 (b) Suppose that she is currently earning an income of $40,000 (1 = 40) and can earn that income next year with certainty. She is offered a chance to take a new job that offers a 0.6 probability of earning $44,000 and a 0.4 probability of earning $33,000. • She should [Select] the new job because her expected utility of (approximately) [Select] is [Select] utility of [Select] her current Natasha has utility function u(I) = (10*1)0.5, where I is her annual income (in thousands). (a) Is she a risk loving, risk averse or risk neutral individual? • She is ✓ [Select] as her utility function is [Select ] risk averse risk neutral (b) Suppo risk loving an income of $40,000 (1 = 40) and can earn that income chance to take a new job that offers a 0.6 probability of next year earning $44,000 and a 0.4 probability of earning $33,000. • She should [Select] the new job because her expected utility of (approximately) [Select] is [Select] utility of [Select ] ✓her current Natasha has utility function u(I) = (10*1)0.5, where I is her annual income (in thousands). (a) Is she a risk loving, risk averse or risk neutral individual? She is [Select] as her utility function is ✓ [Select] concave convex (b) Suppose that she is currently earning an income of $40,000 (1 = next year with certainty. She is offered a chance to take a new job earning $44,000 and a 0.4 probability of earning $33,000. linear • She should [Select] ✓the new job because her expected utility of (approximately) [Select] is [Select] utility of [Select ] her current (b) Suppose that she is currently earning an income of $40,000 (1 = 40) and can earn that income next year with certainty. She is offered a chance to take a new job that offers a 0.6 probability of earning $44,000 and a 0.4 probability of earning $33,000. • She should ✓ [Select] the new job because her expected utility of take (approxima not take is [Select] utility of [Select ] her current (b) Suppose that she is currently earning an income of $40,000 (1 = 40) and can earn that income next year with certainty. She is offered a chance to take a new job that offers a 0.6 probability of earning $44,000 and a 0.4 probability of earning $33,000. • She should [Select] the new job because her expected utility of (approximately ✓ [ Select] is [Select] 18.27 utility of [S [Sel 19.85 20 20.95 21.14 ✓her current (b) Suppose that she is currently earning an income of $40,000 (1 = 40) and can earn that income next year with certainty. She is offered a chance to take a new job that offers a 0.6 probability of earning $44,000 and a 0.4 probability of earning $33,000. She should [Select] the new job because her expected utility of (approximately) [Select] is ✓ [Select] utility of [Select] greater than less than equal to her current (b) Suppose that she is currently earning an income of $40,000 (1 = 40) and can earn that income next year with certainty. She is offered a chance to take a new job that offers a 0.6 probability of earning $44,000 and a 0.4 probability of earning $33,000. • She should [Select] the new job because her expected utility of (approximately) [Select] ✓is [Select] utility o ✓ [Select] 18.27 19.85 20 20.95 21.14 ✓her current
