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T/F Explain
Utility numbers cannot be negative since higher utility means a con- sumer is better off.
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- Show that a decision maker who has a linear utilityfunction will rank two lotteries according to their expectedvalue.For a certain Utility function, which is a simple sifted parabolic equation, the maximum utility is 10 for n=5. Determine the mathematical expression of this Utility function. Hint: look up (h,k) values for a parabola. Multiple Choice 10n + 5 10n + 5n - 2n2 +10n + 5 - (n-5)2+10Question 32 32. Ann maximizes the utility U (со, с1, с2) %3 u(со) + би(с1) + 82и(с2) with u(ci) = c¡ and a discount factor 8 < 1. She is indifferent between streams (81, 53, 0) and (0, 53, 100). Then 8 equals (A) 10%; (B) 19%; (C) 0.9; (D) not enough information. O A ов O D
- If a person lives for 3 years with a disease and the current standard of care for that disease means he/she lives with a utility level of 0.7.-What is the QALY? Answer in not less than 300 wordsSuppose a household has the following lifetime utility function: U=c1/2 + ẞc¹/2 12tt+1 A) Find expressions for the partial derivatives of lifetime utility, U, with respect to period t and period t + 1 consumption. Is marginal utility of consumption in both periods always positive? B) Find expressions for the second derivatives of lifetime utility with respect to period t and t+1 consumption, i.e., 2U and a 20_Are these second derivatives always negative for ac²²+1 any positive values of period t and t+1 consumption? C) Derive an expression for the indifference curve associated with lifetime utility level Uo (i.e., derive an expression for C++₁ as a function of U₁ and c). What is the slope of the indifference curve? How does the magnitude of the slope vary with the value of c?Problem 1 Jane has the following utility function: u(w) w^.5 or the square root. function Which of the following prospects would she prefer? P1(.4, 3,000, 600) P2(.7, 1,200, 1,000) P3(.6, 2,000, 100)
- pter 7 -d (Last Word) When DVD players start becoming obsolete then, to potential thieves, the Multiple Choice marginal utility of stealing them increases. marginal utility of stealing them decreases. marginal cost of stealing them increases. marginal cost of stealing them decreases. 60 SEP Submi < PrevV*(p1, p2, 1) = True False P₁ P₂ 1² is a valid indirect utility function.Whats the differnce between Expected Monetary Value (EMV) criterion and the Expected Utility Value criterion to decision making
- Emma has a utility functionU(x1, x2, x3) = logx1+ 0.8logx2+ 0.72logx3 incomes x1 , x2, x3 in the next three years. This is an example of (A) expected value; (B) quasi-hyperbolic utility function; (C) standard discounted utility; (D) none of the above.Becky is deciding whether to purchase an insurance for her home againtst burglary. the payoff for her is shown as follow: Net worth of her Net worth of her home: $ 20000 burglary(10%) Net worth of her Net worth of her home: $50000 burglary (90%) The insueance would cover all the loss from burlary and the insurance fee is $8000. Her utility funtion is given as u=w ^0.3 Should Beck purchase the insurance Explain.(,) →u(い)=2 (4, 1) >u c4,1) = 3 (1,4)= uCI,4) = 5 %3D %3D C,6)→ 4C1,16)=1は O C,16)>(6,1)~( ) 11い) Find utility function represen ting these Pefrences.