Suppose that a decision maker's utility as a function of her wealth,x, is given byU(x) = ln (2x-1000)(where ln is the natural logarithm).

The decision maker now has $10,000 and two possible decisions. For Alternative 1, she gains $1250 for certain. For Alternative 2, she gains $2000with probability 0.9 and loses $4,000 with probability 0.1. Which alternative should she choose and what is her expected utility (rounded to 2 decimals)?

a.She should choose Alternative 2. Her expected utility is 9.99.

b.She should choose Alternative 1. Her expected utility is 9.98.

c.She should choose Alternative 1 because there is no risk.

d.She is indifferent between the two alternatives as both options give her the same expected utility.