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Rosa's current income level is $5000 per month. Her utility function is given in the following table. Income Total Utility Marginal Utility $0 0 $1000
Rosa's current income level is $5000 per month. Her utility function is given in the following table. Income Total Utility Marginal Utility $0 0 $1000 2000 N $2000 3900 1.9 $3000 5700 $4000 7400 $5000 9000 $6000 10500 $7000 11900 $8000 13200 $9000 14400 $10000 15500 a) Calculate Rosa's marginal utility of income. What is her attitude toward risk? Is she risk-neutral? b) Rosa is thinking to bet on the 76ers during the NBA finals. With a probability of 0.5. she will win $5000 and with a probability of 0.5, she will lose $1000. What is the expected value of this bet? What is Rosa's expected utility? Will she bet?c) If the spread between how much she can win versus how much she can lose of the bed narrows; with a probability of 0.5, she will win $3000 and with a probability of 0.5, she will lose $1000. What is the expected value of this bet? What is Rosa's expected utility? Will she bet
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