Determine the utility function of lifetime wealth

Assignment Help Macroeconomics

Reference no: EM13208296

Suppose you have been accepted by two colleges, A and B.

A is a much more demanding and also a more prestigious institution than B. B is a safe option in the sense that you know you will do reasonably well academically there, and that after graduation you will land an "adequate" job. If you manage to survive academically at A, you will land a "great" job (60% probability); but it is also possible that you will do poorly there, in which case you will end up in a "bad" job (40% probability). The following chart shows the lifetime wealth levels for each type of job and the corresponding probabilities. If your utility function of lifetime wealth , which college should you attend?

Reference no: EM13208296

Questions Cloud

When pay the amounts rather than receive them : At an annual compound interest of 10% per year, would you rather receive $10,000 per year for 5 years or receive $5,000 per year for 10 years What is your preference if you must pay these amounts rather than receive them

The ancestors of the native american peoples : The ancestors of the Native American peoples...

Explain the value of the equilibrium constant for haber : What is the value of the equilibrium constant for Haber process at 298K if the equilibrium concentration are as follows:

Explain the appropriate calibration curve of fluoride : Construct the appropriate calibration curve as described in this lab and determine the %(W/W) of fluoride in the original toothpaste sample:

Determine the utility function of lifetime wealth : A is a much more demanding and also a more prestigious institution than B. B is a safe option in the sense that you know you will do reasonably well academically there, and that after graduation you will land an "adequate" job.

Readmitting states that have seceded from the union : According to the Constitution, which branch of government is responsible for readmitting states that have seceded from the Union?

Find the equilibrium quantity : The weekly demand and supply functions for Sportsman 5 X 7 tents are given by the following respective functions where p is measured in dollars and x is measured in units of a hundred.

Dragging and dropping the appropriate splitting patterns : Construct a simulated 1H NMR spectrum for 1,1-dichloroethane by dragging and dropping the appropriate splitting patterns into the boxes on the chemical shift baseline

What would pay to get out of the gamble : Your current wealth level is M=49, and you are forced to make the following wager: if a fair coin comes up heads, you get 15; you lose 24 if it comes up tails. Your utility function is U(X)=sqrt(X). What is the most you would pay to get out of the ..

User Account

All Pages