Satisfaction or preference for various amounts of money

Assignment Help Operation Management

Reference no: EM13843844

Steve is a rational person whose satisfaction or preference for various amounts of money can be expressed as a function U(x)=(x/100)^2, where x is in $. How much Satisfaction does $20 bring? If we limit the range of U(x) between 0 1.0, then we can use this function represent steve's utility What is the shape of his utility function (Concave, convex, straight line, none of these) What does this graph show about steve's incremental satisfaction? (Increases with increasing x, decreases with increasing x, does not change with x, none of these) The shape of Steve's utility function shows that he is willing to accept more risk than a risk-neutral person. (True or False) Steve is considering a lottery which the payoff of $80 40% of the time and a $10 60% of the time. If steve plays the lottery repeatedly, how much will his long term average satisfaction be? For Steve, what amount (in nearest whole $) would give him the same satisfaction equal to the previous question?

Reference no: EM13843844

Questions Cloud

Vision statement and mission statement : Should organizations have both a vision statement and a mission statement? If you were to lead an organization and you could have only one, a mission or vision statement, which would you choose and why?

What are expected returns-standard deviation of portfolio : Stock A has an expected return of 12% and a standard deviation of 40%. Stock B has an expected return of 18% and a standard deviation of 60%. The correlation coefficient between Stocks A and B is 0.2. What are the expected returns and standard deviat..

Common fallacies in organizational diagnosis : Where are the weak points in your perspective and understanding and where are the weak points in your organization? How are these weak points linked to the common fallacies in organizational diagnosis?

Basic capital structure decisions made by corporation : Without getting into too much personal detail, how does a firm’s capital structure relate to an individual’s capital structure? In what ways are they similar? Provide examples of how an individual might use debt and equity that parallels the basic ca..

Satisfaction or preference for various amounts of money : Steve is a rational person whose satisfaction or preference for various amounts of money can be expressed as a function U(x)=(x/100)^2, where x is in $. How much Satisfaction does $20 bring? If we limit the range of U(x) between 0 1.0, then we can us..

Steadily increasing over past decade-transportation function : The growth in the use of 3PLs has been steadily increasing over the past decade. As stated in the text, there are often good reasons to outsource all or part of the transportation function, but there are also downside risks. As the VP for Logistics i..

Example of vertical integration in logistics : Identify and briefly describe one example of vertical integration in logistics (or in the transportation function). Include in your comments, the firms involved, the rationale for integration, and actual results (if available). Be sure to cite or inc..

Review the leadership model adapted from montgomery : Review the Leadership Model adapted from Montgomery, Copley, and Associates (1996). Using this model as a framework, select any Northouse (2010) case study that has not been assigned as a Critical Thinking Activity and offer the model as a potential ..

Use momentum conservation to find the initial velocity : Use momentum conservation to find the initial velocity of the mass

User Account

All Pages