Suppose a family has saved enough for a 10 day vacation (the only one they will be able to take for 10 years)and has a utility function U = V^1/2 (where V is the number of healthy vacation days they experience).Suppose they are not a particularly healthy family and the probability that someone will have a vacation ruining illness (V = 0)is 30%.What is the expected value of V? A) 10 B) 7 C) 3 D) 0

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Quizplus · Accepted Answer

The expected value of V is calculated as (0.7 * 10) + (0.3 * 0) = 7, considering the probability of having healthy vacation days and the probability of illness.

Suppose a Family Has Saved Enough for a 10 Day