-Andrew's utility of wealth schedule is depicted in the above table. Andrew is offered a job as a cook which pays $10,000. He is also offered a job as a server which will pay $5,000 if tips are poor and $15,000 if tips are good. There is a 50 percent chance that tips will be poor and a 50 percent chance that tips will be good. Andrew will accept the offer that
A) maximizes his expected income.
B) maximizes his expected utility.
C) maximizes both his expected income and expected utility.
D) has the highest weighted average of income and utility.

Question

-Andrew's utility of wealth schedule is depicted in the above table. Andrew is offered a job as a cook which pays $10,000. He is also offered a job as a server which will pay $5,000 if tips are poor and $15,000 if tips are good. There is a 50 percent chance that tips will be poor and a 50 percent chance that tips will be good. Andrew will accept the offer that
A) maximizes his expected income. 
B) maximizes his expected utility. 
C) maximizes both his expected income and expected utility. 
D) has the highest weighted average of income and utility.

Quizplus · Accepted Answer

Andrew will choose the option that maximizes his expected utility, as individuals typically make decisions based on utility rather than just income.

-Andrew's Utility of Wealth Schedule Is Depicted in the Above