Question: Suppose your utility function is U(x) = log(x). You are considering leasing a machine that would produce an annual profit of $10; 000 with probability

Suppose your utility function is U(x) = log(x). You are considering leasing a machine that would produce an annual profit of $10; 000 with probability p = 0:4 or a profit of $8; 000 with probability p = 0:6. What is the certainty equivalent for this random return?

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