Expected utility question a worker currently makes 1200 per


Question: Expected Utility question: A worker currently makes $1,200 per month waiting tables in Alabama. His friend in New York tells him that there might be a temporary job for him in New York that pays more. But, he would have to come to New York now. If he comes, there is a 90% chance there will be a job paying x, and a 10% chance that he'll earn nothing for that month. (The next month he'll be back in Alabama either way.) Suppose his utility over income is given by the function u(x) = v x. What is the minimum this job would need to pay to convince him to take the chance coming to New York? Assume his transport costs are $150 for the return trip to New York. Ignore differences in cost of living between Alabama and New York. Assume that the worker has the $150 available to pay the transport cost.

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Microeconomics: Expected utility question a worker currently makes 1200 per
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