Amanda recently graduated from college,and she has a job offer with uncertain income.There is a 70% probability that she will make $10,000 and a 30% probability that she will make $70,000.Suppose Amanda is offered another job with a certain income.All else equal,if she has a constant marginal utility of income,she will accept the second job offer only if it pays more than:
A) $40,000.
B) $28,000.
C) $10,000.
D) $21,000.
Correct Answer:
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