Consider a risk averse individual who has utility function u(a) which is increasing with u(0) = 0. There is one safe asset which gives $1 for every dollar invested. There are two risky assets: A, B. For A, every dollar invested gives return $0 with probability 4/5 and $3 with probability 1/5. For B, every dollar invested gives return is $0 with probability 2/3 and $3 with probability 1/3. The individual has $60 to invest. Out of $60, the individual must invest $30 in the safe asset and the remaining $30 can be invested in risky assets. Consider two investment choices: (1) invest entire $30 in A and (2) invest $15 in A, $15 in B. (a) [3 points] Drawing diagram of the utility function and showing your work, determine the
expected utility of the individual from choice 1.

(b) [3 points] Drawing diagram of the utility function and showing your work, determine the
expected utility of the individual from choice 2 when return from A is bad.

(c) [3 points] Drawing diagram of the utility function and showing your work, determine the
expected utility of the individual from choice 2 when return from A is good.

(d) [3 points] Drawing diagram of the utility function and showing your work, determine the
expected utility of the individual from choice 2.

(e) [2 points] Comparing expected utility from choices 1,2 in a diagram, determine which choice
is better.

answer: 2 litters juice bottle

half of a gallon is 50% of a full gallon 2 litters of juice is 52% of a full gallon

hope this ^_^

step-by-step explanation:

i found the life tables for the year 2012. 

life table of males at age 30. probability of dying between ages x and x+1

total population:  

29–30 . . . . . . . . . . . . 0.001030

30–31 . . . . . . . . . . . . 0.001061

males:  

29–30 . . . . . . . . . . . . 0.001420

30–31 . . . . . . . . . . . . 0.001448

white population

29–30 . . . . . . . . . . . . 0.001005

30–31 . . . . . . . . . . . . 0.001037

white males

29–30 . . . . . . . . . . . . 0.001372

30–31 . . . . . . . . . . . . 0.001399

non hispanic white population

29–30 . . . . . . . . . . . . 0.001083

30–31 . . . . . . . . . . . . 0.001116

non hispanic white males

29–30 . . . . . . . . . . . . 0.001477

30–31 . . . . . . . . . . . . 0.001503

jacob, non hispanic white male. 30 years old.

probability that jacob lives to be 30 years old. 

since the given probabilities are probabilities of dying, i think we simply subtract it from 1 to get the probability of living. we will use the probability of non hispanic white male.

                                          probability of living to be 30 y.o.

29 - 30 : 1 - 0.001477 = 0.998523

30 - 31 : 1 - 0.001503 = 0.998497

answer is b

step-by-step explanation: