George is indifferent between $100 and a bet with a 0.6 chance of $50 and a 0.4 chance of $200.If U(50)= a and U(200)= b,then U(100)= :

Question

Quizplus · Accepted Answer

George's indifference between $100 and a mixed bet with probabilities of 0.6 for $50 and 0.4 for $200 means the expected utility of the bet equals the utility of $100. The expected utility of the bet is calculated as 0.6U($50) + 0.4U($200) = 0.6a + 0.4b, matching choice B.

George Is Indifferent Between $100 and a Bet with a 0.6