Vicky N. Vestor is considering investing some of her money in a startup company. She currently has
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Income Total utility (utils)
$0…………………………….. 0
1,000…………………………. 50
2,000…………………………. 85
3,000…………………………. 115
4,000…………………………. 140
5,000…………………………. 163
6,000…………………………. 183
7,000…………………………. 200
8,000…………………………. 215
9,000…………………………. 229
10,000…………………………. 241
a. Calculate Vicky's marginal utility of income for each income level. Is Vicky riskaverse?
b. Calculate the expected value of Vicky's income if she makes this investment.
c. Calculate Vicky's expected utility from making the investment.
d. What is Vicky's utility from not making the investment? Will Vicky therefore invest in the company?
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