Question
True or False and simple explanation Question 4 Suppose Anil won 100 in the lottery and can choose to split it with his friend Bala.
True or False and simple explanation
Question 4 Suppose Anil won 100 in the lottery and can choose to split it with his friend Bala. If Anil's preferences are u(A,B) = min{2A, B} (where A = lottery money that Anil keeps, B = lottery money that Anil gives to Bala), then it is optimal for Anil to give Bala one-third of the lottery money.
Question 5 Suppose your preferences over bars of chocolate (C) and muffins (M) are represented by the utility function u(C,M) = 4C1/2 + M. At the current prices and income, your optimal choice is 3 bars of chocolate and 2 muffins. If you win 10 in the lottery, then your optimal consumption of both chocolate and muffins will increase.
Question 6 In the ultimatum game, if the Responder accepts an offer of x, she receives a utility of x, and a utility of R(20-x) if she rejects (where R is a number). If R=3, then Responder will accept an offer of 25.
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