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Business, 01.11.2019 06:31 volleyballfun24

Upon graduating, sarah must ship her belongings to england from two separate loca- tions in the us: new york and maine. suppose that each location contains s1,000 worth of belongings. the chance that a ship sinks (and she loses the entire value of the belongings on the ship) is .10. this chance is independent across ships so that the fact that one ship sinks does not change the probability that a second ship sinks. she has the option of shipping her belongings in a single container on one ship or shipping the belongings separately on two different ships. (a) if the movers will ship her goods for the same price either separately or on the same ship, which method of shipment will she choose if she is risk-averse? if she is risk-neutral? if she is risk-loving? (b) let sarah have utility function u(x-x for x < $1,000 and u(x) $500+ 줄 for x > $1,000, where x is the value of her belongings. draw her utility function for x between 80 and $2000. (c) is sarah risk-averse, risk-neutral or risk-loving? (d) how much more would she be willing to pay for her preferred form of shipment?

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