Question 2 AppleSam is a monopolist in the market of smart cellphones. Currently it has profits for 20 million. However, AppleSam can invest 5 million in R&D to develop a new technology that, if successful, can increase profits by 30 million. However, the technology is succesful only with probability 40% and fails with probability 60%. Ap- pleSam is owned by Steven Zucktemberg who has a utility function for money given by us (w) = 1 - exp(-yw), where y > 0. Here, exp refers to the exponential function. (a) (5 marks) Is Steven risk-averse, risk-neutral, or risk-seeking? Show your work. (b) (5 marks) Compute Steven's expected utility if he chooses to develop the new tech- nology. (c) (5 marks) Instead of developing the new technology, AppleSam can acquire the startup communication company HiThere! The acquisition would increase the profits of AppleSam by 3 million dollars with certainty. Suppose y = 0.5. What is the minimum value of S that would make Steven prefer to acquire the startup instead of developing the new technology? [Use Wolfram to perform computations if necessary]. (d) (7 marks) Suppose the two sons of Steven, Bill and Paul, become co-owners of AppleSam. Bill has a utility function for money given by u(w) = w and Paul has a utility function given by u (w) = 1 5, who, where 0