A. Consider a lottery with three possible outcomes: $125 will be received with probability 0.2 $100 will be received with probability 0.3 $50 will be received with probability 0.5 What is the expected value of the lottery? What is the standard deviation of the outcomes? What would a risk-neutral person pay to play the lottery? B. Suppose that Asia's utility function is given by u(l) = J 10L where l represents annual income in thousands of dollars. Is Asia risk loving, risk neutral, or risk averse? Explain. Suppose that Asia is currently earning an in-come of $40,000 (I = 40) and can earn that income next year with certainty. She is offered a chance to take a new job that offers a .6 probability of earning $44,000 and a .4 probability of earning $33,000. Should she take the newjob? In (b), would Asia be willing to buy insurance to protect against the variable income associated with the new job? If so, how much would she be willing to pay for that insurance? (Hint: What is the risk premium)