roy's utility over consumption is given by u(x)=x^0.4. If troy is unemployed, which occurs with probability 40%, his consumption is $36, If Troy is employed, his consumption is $1000 How much expected consumption is Troy willing the give up in order to get rid of the risk associated with unemployment?
roy's utility over consumption is given by u(x)=x^0.4. If troy is unemployed, which occurs with probability 40%, his consumption is $36, If Troy is employed, his consumption is $1000 How much expected consumption is Troy willing the give up in order to get rid of the risk associated with unemployment?
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Troy's utility over consumption is given by u(x)=x^0.4. If troy is unemployed, which occurs with probability 40%, his consumption is $36, If Troy is employed, his consumption is $1000
How much expected consumption is Troy willing the give up in order to get rid of the risk associated with
Transcribed Image Text:Troy's utility over consumption is given by u(x)-x If Troy is unemployed, which occurs with probability 40 %, his consumption is
$36, If Troy is employed, his consumption is $100.
How much expected consumption is Troy willing to give up in order to get rid of the risk associated with unemployment?
Enter below a numerical value in dollars. Round to the second significant decimal if necessary (e.g. if your value is 99.012345, you
should enter 99.01). Enter your number with a negative sign if Troy must receive a higher expected consumption.
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