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Suppose U(x)=x0.5 a. Graph this utility function. b. Suppose you have a binary lottery with a...

Suppose U(x)=x0.5

a. Graph this utility function.
b. Suppose you have a binary lottery with a 40% chance of $25 and a 60% chance of $100. Draw
the probability tree of this lottery.
c. Show the lottery in Part B on your graph from Part A. You need to show: U(25), U(100), EV,
U(EV), EU, U(CE) and the CE. Be sure to label everything clearly.
d. What can you say about the CE and EV for this lottery? Why?

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