Categorize the utility functions

Reference no: EM1311961

Shaqueena's utility function is given by U= I^1/2, where I represents annual income in thousands of dollars.

a) Is Shaqueena risk loving, risk neutral or risk averse?

b) Suppose Shaqueena is currently earning income of $23,000 (I =23) and can earn that income next year with certainty. She is offered a chance to take a new job that offers a 0.5 probability of earning $25000 and a 0.5 probability of earning $16000. Should she take the new job?

Reference no: EM1311961

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