Linus Piecewise is an expected utility maximizer. There are two events, H and T, which each have probability . Linus's preferences over lotteries in which his wealth is h if event H happens and t if event T happens are representable by the utility function . The function u takes the following form. For any x, u(x) = x if x

Question

Linus Piecewise is an expected utility maximizer. There are two events, H and T, which each have probability  . Linus's preferences over lotteries in which his wealth is h if event H happens and t if event T happens are representable by the utility function  . The function u takes the following form. For any x, u(x) = x if x < 100 and u(x) = 100 +  if x is greater than or equal to 100. Draw a graph showing the indifference curves for Linus that pass through 
a. the point (50, 0)
b. the point (50, 100)
c. the point (100, 100)
d. the point (150, 100)

Quizplus · Accepted Answer

The Answer of Linus Piecewise is an expected utility maximizer. There are two events, H and T, which each have probability  . Linus's preferences over lotteries in which his wealth is h if event H happens and t if event T happens are representable by the utility function  . The function u takes the following form. For any x, u(x) = x if x < 100 and u(x) = 100 +  if x is greater than or equal to 100. Draw a graph showing the indifference curves for Linus that pass through 
a. the point (50, 0)
b. the point (50, 100)
c. the point (100, 100)
d. the point (150, 100)

Linus Piecewise Is an Expected Utility Maximizer