Steve's satisfaction
Steve is a rational person whose satisfaction or preference for various amounts of money can be expressed as a function U(x)=(x/100)62, where x is in $. How much Satisifaction does $20 bring? If we limit the range of U(x) between 0 1.0, then we can use this function represent steve's utility What is the shape of his utility function (Concave, convex, straight line, none of these) What does this graph show about steve's incremental satifaction? (Increases with increasing x, decreases with increasing x, does not change with x, none of these) The shape of Steve's utility function shows that he is willing to accept more risk than a risk-neutral person. (true or False) Steve is considering a lottery which the payoff of $80 40$ of the time and a $10 60% of the time. If steve plays the lottery repeatedly, how much will his long term average satisfaction be? For Steve, what amount (in nearest whole $) would give him the same satifaction equal to the previous question?
Steve is a rational person whose satisfaction or preference for various amounts of money can be expressed as a function U(x)=(x/100)62, where x is in $. How much Satisifaction does $20 bring? If we limit the range of U(x) between 0 1.0, then we can use this function represent steve's utility What is the shape of his utility function (Concave, convex, straight line, none of these) What does this graph show about steve's incremental satifaction? (Increases with increasing x, decreases with increasing x, does not change with x, none of these) The shape of Steve's utility function shows that he is willing to accept more risk than a risk-neutral person. (true or False) Steve is considering a lottery which the payoff of $80 40$ of the time and a $10 60% of the time. If steve plays the lottery repeatedly, how much will his long term average satisfaction be? For Steve, what amount (in nearest whole $) would give him the same satifaction equal to the previous question?
0 comments:
Post a Comment