Suppose that a decision maker's utility as a function of her wealth,x, is given byU(x) = 10+lnx(the natural logarithm ofx).

The decision maker now has $15,000 and two possible decisions. For decision 1, she loses $1,000 for certain. For decision 2, she loses $0 with probability 0.75 and loses $4,000 with probability 0.25. Which decision maximizes the expected utility of her net wealth?

a. She should choose option 2.Her expected utility is 19.58.

b. She should choose option 2.Her expected utility is 19.54.

c. She should choose option 1.Her expected utility is 14.15

d. She should choose option 1.Her expected utility is 19.55.