Question: Irem has a utility function U(x)=x1/3. She is indifferent between 1000 TL for sure and a lottery which offers m TL with probability and zero

Irem has a utility function U(x)=x1/3. She is indifferent between 1000 TL for sure and a lottery which offers m TL with probability and zero with probability ). She does not need to make a payment to get the lottery.

a) ) Determine m. b) (2 pts) Is Irem risk loving, risk neutral or risk averse?

b) Discuss briefly the concepts of Certainty Equivalent (CE) and Expected Monetary Value of the Lottery (EMV) and justify your result based on these concepts of CE and EMV.

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