7. Suppose the manager in Technical Problem 4 can avoid the risky decision in that problem by choosing instead to receive with certainty a sum of money exactly equal to the expected profit of the risky decision in Technical Problem 4.

a. The utility of the expected profit is .

b. Compare the utility of the expected profit with the expected utility of the risky decision

(which you calculated in part b of Technical Problem 4). Which decision yields the greatest expected utility for the manager?

c. Is your decision in part b consistent with the manager’s attitude toward risk, as it is reflected by the utility function for profit? Explain.