Plot this utility function for values of income in the range

Reference no: EM131072495

A worker has a utility of income function defined by U = √ Y.

(a) Plot this utility function for values of income in the range 1. . . 36.

(b) Suppose the individual this time period has Y = 16, and he has a 50% chance of seeing his income increase or decrease. If it decreases we know it will fall to $1. If it increases, by how much would income have to increase to leave his expected utility equal to the level he attains when he gets an income of $16 with certainty?

Reference no: EM131072495

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