Question: 1. Suppose that you have a utility function given by the equation U = 507. Consider a lottery that provides a payoff of So with

1. Suppose that you have a utility function given by the

1. Suppose that you have a utility function given by the equation U = 507. Consider a lottery that provides a payoff of So with probability 0.75 and $200 with probability 0.25 a) Sketch a graph of this utility function, letting I vary over the range 0 to 200, b) Verify that the expected value of this lottery is $50. c) What is the expected utility of this lottery? d) What is your utility if you receive a sure payoff of $50? Is it bigger or smaller than your expected utility from the lottery? Based on your answers to these questions, are you risk averse

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