Individual buying a car would prefer a free gps

Assignment Help Business Economics

Reference no: EM1320840

Q1. Consider the subsequent lotteries:

A: -$4100 p = 1.0 B: -$10000 p = 0.40
$0 p = 0.60

C: -$4100 p = 0.25 D: -$10000 p = 0.10
$0 p = 0.75 $0 p = 0.90

Assume A is preferred to B. Demonstrate that C is preferred to D based on the expected utility criterion.

Q2. Draw an indifference mapping to explain how an individual buying a car would prefer a free GPS system to a free leather seat upgrade.

Reference no: EM1320840

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