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Consider two economies. Assume that the two economies are populated by individuals whose preferences are represented with U (C) = avC where a > 0
Consider two economies. Assume that the two economies are populated by individuals whose preferences are represented with U (C) = avC where a > 0 is a constant. In the first consumption fluctuates between 1 and 4 with both outcomes being equally likely. In the second consumption fluctuates between 4 and 16 again with both outcomes being equally likely. In which of the two economies are consumers happier? a) it depends on the value of a b) in the second c) in the first d) same in both
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