Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Norman, a high school English teacher, is trying to decide whether to leave his job to work as a writer for a proposed television sitcom.

Norman, a high school English teacher, is trying to decide whether to leave his job to work as a writer for a proposed television sitcom. His teaching job pays $40,000 per year and his is guaranteed 25,000 for the first year whether or not the sitcom makes it to television, 50,000 if it makes it to television but is not the most viewed show in its time slot and $100,000 if it makes it to television and is the most viewed show in its time slot. Norman wants to maximize his total utility and his utility function as shown in the table. Income Total Utility (utils) $25,000 1,500 $30,000 1,900 $35,000 2,250 $40,000 2,550 $45,000 2,800 $50,000 3,000 $55,000 3,150 $60,000 3,250 $65,000 3,300 $100,000 3,500 Reference: Ref 20-9 Table: Choice with Uncertainty (Table: Choice with Uncertainty) Use Table: Choice with Uncertainty. Suppose that the probability that the sitcom does not make it to television is 60%, the probability that it makes it to television but is not the most viewed show in its time slot is 30%, and that the probability that it makes it to television and is the most viewed show in its time slot is 10%. Norman's expected total utility is _____ utils. Question 40 options: 2,150 2,650 2,350 2,000

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Contemporary Engineering Economics

Authors: Chan S. Park

5th edition

136118488, 978-8120342095, 8120342097, 978-0136118480

More Books

Students also viewed these Economics questions

Question

Pollution

Answered: 1 week ago

Question

The fear of making a fool of oneself

Answered: 1 week ago