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Assessment

$+250$ pts

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Question $4$ of $20$

$($Table: Total Utility and Choices with Uncertainty and Scenario: A Novelist or a Teacher$)$ Use Table: Total Utility and Choices with Uncertainty and Scenario: A Novelist or a Teacher.

Scenario: Elizabeth is working as a high school English teacher and is considering leaving her teaching job to ghost write biographies for Hollywood actors. Her teaching job pays $$40,000$ per year. In contrast, the ghost writing will pay $$25,000$ for the first year whether the biography is a success or not, $$50,000$ if it is a success, and $$100,000$ if it is a success and is optioned for a movie deal. Elizabeth is a utility maximizer; her utility function is shown in the table. Suppose that the probability that a biography is not a success is $50\%,$ that it is a success is $30\%,$ and that it is a success and optioned for a movie is $20\%.$

Given this information, Elizabeth's expected total utility is:

$\backslash$table$[[$Total Utility and Choices with Uncertainty$],[$Income$,$Total Utility$],[$$$25,000,1,500],[$$$30,000,1,900],[$$$35,000,2,250],[$$$40,000,2,550],[$$$45,000,2,800],[$$$50,000,3,000],[$$$55,000,3,150],[$$$60,000,3,250],[$$$65,000,3,300],[$$$100,000,3,500]]$

$2,000.$

$2,150.$

$2,350.$

$2,650.$