Consider a consumer whose utility function for income is given by square root of x. this consumer is offered a choice between: (1) a certain outcome of obtaining $225 and (2) a risky gamble which generates either an outcome of x1=$100 with probability pr(x1)=0.5, or an outcome of x2=$400 with probability pr(x2)=0.5. which of the following statements is true?
a. such a person prefers option 1 and she is risk averse. b. she is risk averse but still prefers option 2 since the expected value is higher c. such a person is indifferent between both option so that makes her risk neutral d. such a person is indifferent between the two choices and is risk averse. e. she prefers option 2 so that makes her risk loving.

You and your new australian bride matilda, are applying for a loan and are required to submit a balance sheet with your net worth. you own a 2008 toyota camry that you bought last month for $9,995. the kelly blue book value for this car is $13,995. you owe $8,150 on the car loan for the camry. you pay off your visa credit card every month and have not paid any credit card interest this year. the current visa credit card balance is $3,522, and the next statement is due in 15 days. you have a student loan balance of $6,500. you presently have $425 in your checking account and $1,540 in your savings account. you own 100 shares of ibm stock that you purchased for $85.50 per share. one share of ibm is now selling for $158.42. you own computers and other electronics that you purchased for $4,100 but could probably sell today on e-bay for $1,800. your gross income is $80,000 per year. what is your current net worth? (see wb ch. 2 example 2.3)

Your subscription to investing wisely weekly is about to expire. you plan to subscribe to the magazine for the rest of your life, and you can renew it by paying $85 annually, beginning immediately, or you can get a lifetime subscription for $620, also payable immediately. assuming that you can earn 6.0% on your funds and that the annual renewal rate will remain constant, how many years must you live to make the lifetime subscription the better buy?

Interview notes mike is 50 and made $36,000 in wages in 2017. he is single and pays all the cost of keeping up his home. mike's daughter, brittany, lived with mike all year. brittany's son, hayden, was born in november 2017. hayden lived in mike's home since birth. brittany is 25, single, and had $1,500 in wages in 2017. she is not disabled. mike provides more than half of the support for both brittany and hayden. mike, brittany, and hayden are all u.s. citizens with valid social security numbers. 4. who can mike claim as a qualifying child(ren) for the earned income credit?