Asked by Zachariah Andress on Jun 29, 2024
Verified
(Table: Choice with Uncertainty) Use Table: Choice with Uncertainty.Suppose that the probability that the sitcom does not make it to television is 30%,that it makes it to television but is not the most viewed show in its time slot is 50%,and that it makes it to television and is the most viewed show in its time slot is 20%.Given this information,Norman,as a utility maximizer:
A) should keep his teaching job.
B) should quit his teaching job and go to Hollywood.
C) will be indifferent between leaving and staying because his expected income is the same whether he stays a teacher or moves to Hollywood.
D) will be indifferent between leaving and staying because his expected total utility is the same whether he stays a teacher or moves to Hollywood.
Expected Income
The income an individual or business anticipates to receive over a certain period.
Utility Maximizer
An individual or agent who seeks to obtain the maximum possible satisfaction or utility from their consumption of goods and services.
Probability
The likelihood of a specific event or outcome occurring.
- Invoke principles of probability to gauge expected income and utility under the cloud of uncertainty.
- Scrutinize the process through which utility maximizers determine their course of action in diverse circumstances characterized by risk and uncertainty.
Verified Answer
AU
Akunna UzomahJul 04, 2024
Final Answer :
B
Explanation :
Based on the given probabilities, the expected utility of quitting his teaching job and going to Hollywood would be higher than the expected utility of staying as a teacher. Therefore, Norman should quit his job and go to Hollywood.
Learning Objectives
- Invoke principles of probability to gauge expected income and utility under the cloud of uncertainty.
- Scrutinize the process through which utility maximizers determine their course of action in diverse circumstances characterized by risk and uncertainty.
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