There are two events, 1 and 2. the probability of event 1 is p and the probability of event 2 is 1 – p. sally kink is an expected utility maximizer with a utility function is pu(c1) + (1 – p)u(c2), where forany number x, u(x) = 2xif x < 1,000 and u(x) = 1,000 + xif xis greater than or equal to 1,000.
a. sally is a risk lover.
b. sally will be a risk averter if she is poor but will be a risk lover if she is rich.
c. sally will be a risk lover if she is poor but a risk averter if she is rich.
d. if there is no chance of her wealth exceeding $1,000, then she will take any bet that has positive expected net winnings.
e. none of the above