Intermediate Microeconomics and Its Application 12th Edition by Walter Nicholson,Christopher Snyder

Exercise 15

A person purchases a dozen eggs and must take them home. Although making trips home is costless, there is a 50 percent chance that all of the eggs carried on one trip will be broken during the trip. This person considers two strategies:
Strategy 1: Take the dozen eggs in one trip.
Strategy 2: Make two trips, taking six eggs in each trip.
a. List the possible outcomes of each strategy and the probabilities of these outcomes. Show that, on average, six eggs make it home under either strategy.
b. Develop a graph to show the utility obtainable under each strategy.
c. Could utility be improved further by taking more than two trips? How would the desirability of this possibility be affected if additional trips were costly?