Question

option 308 is incorrect please help me solve this hw problem

Scenario 5.6: Consider the information in the table below, describing choices for a new doctor. The outcomes represent different macroeconomic environments, which the individual cannot predict. We assume the doctor's utility of income function is given as: U(I) = 10.5, where I represents income. Outcome 1 Outcome 2 Job Choice Prob. Income Prob. Income 0.95 $100,000 0.05 $60,000 Work for HMO Own practice Research 0.2 $250,000 0.8 $30,000 0.1 $500,000 0.9 $50,000 Refer to Scenario 5.6. The expected utility of income from research is 131 524 • 308 dependent on which outcome actually occurs. 272 0.1*(500000,0.5 +0.9(50000)0.5

Answer 1

D)272

Expected utility of income for research=

=$500000^0.5× 0.1+$ 50000^0.5×0.90

= $ 70.72+ $ 201

=$ 271.72

= $ 272