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Managerial Economics · End Term · 13 Sept 2026 · May 2026 term · Set S2

Question 26: Suppose that John’s utility function is U= 100I Choose t…

Question 26

+1 markOne correct option

Consider the two lotteries A and B. With lottery A, there is a 0.90 chance that you receive a payoff of $0 and a 0.10 chance that you receive a payoff of $400. With lottery B, there is a 0.5 chance that you receive a payoff of $30 and 0.50 chance that you receive a payoff of $50.
Based on the above data, answer the given subquestions.

Suppose that John’s utility function is U= 100I Choose the correct alternative

  1. A

    With this utility function John is risk averse

  2. B

    With this utility function John is risk loving

  3. C

    With this utility function John is risk neutral

  4. D

    Cannot be determined

Show answer

Correct answer

  • C

    With this utility function John is risk neutral

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Question 26 of 43 in the IIT Madras BS Managerial Economics (Managerial Economics) End Term paper sat on 13 Sept 2026, in the May 2026 term (Managerial Economics 13 Sep 26 (Session 2)). It carries 1 mark.

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