Answer to Question #310046 in Microeconomics for Balewgeta

Question

Suppose that the consumer asked to contemplate a gamble with a probability of 60% of winning birr 10,000 with a utility of 10 utils and 40% probability of winning birr 15000 with a utility of 12 utils. What will be expected income

Answer 1

The expected income = $(60$%*10000)+(40%*15000)

= 6000+6000

=12000

the expected income is 12000