(Table: Total Utility and Choices with Uncertainty and Scenario: A Novelist or a Teacher) Use Table: Total Utility and Choices with Uncertainty and Scenario: A Novelist or a Teacher. Suppose that the probability that a biography is not a success is 50%, that it is a success is 30%, and that it is a success and optioned for a movie is 20%. Given this information, Elizabeth's expected total utility is _____ utils.
Scenario: A Novelist or a Teacher
Elizabeth is working as a high school English teacher and is considering leaving her teaching job to ghost write biographies for Hollywood actors. Her teaching job pays $40,000 per year. In contrast, the ghost writing will pay $25,000 for the first year whether the biography is a success or not, $50,000 if it is a success, and $100,000 if it is a success and is optioned for a movie deal. Elizabeth is a utility maximizer; her utility function is shown in the table.
A) 2,000
B) 2,150
C) 2,350
D) 2,650
Correct Answer:
Verified
Q157: (Table: Utility and Income Levels for
Q158: (Table: Total Utility of Income after
Q159: (Table: Total Utility of Income After
Q160: (Table: Total Utility of Income After
Q161: (Table: Total Utility of Income After
Q163: (Table: Total Utility and Choices with
Q164: (Table: Total Utility and Choices with
Q165: (Scenario: Deciding on Insurance Type under Uncertainty)
Q166: (Scenario: Deciding on Insurance Type under Uncertainty)
Q167: (Table: The Utility from Income for
Unlock this Answer For Free Now!
View this answer and more for free by performing one of the following actions
Scan the QR code to install the App and get 2 free unlocks
Unlock quizzes for free by uploading documents