Use the following to answer question:
Figure: Differences in Risk Aversion
-(Figure: Differences in Risk Aversion)Use Figure: Differences in Risk Aversion.Which statement is CORRECT?
A)Ernest will gain more utility from insurance than will Salvatore.
B)Salvatore will gain less utility from an increase in income than will Ernest but will lose more utility than will Ernest from a fall in income.
C)Ernest is more risk-averse than Salvatore.
D)If either Ernest or Salvatore buys insurance,adverse selection will occur.

Question

Use the following to answer question:
Figure: Differences in Risk Aversion 
-(Figure: Differences in Risk Aversion)Use Figure: Differences in Risk Aversion.Which statement is CORRECT?
A)Ernest will gain more utility from insurance than will Salvatore. 
B)Salvatore will gain less utility from an increase in income than will Ernest but will lose more utility than will Ernest from a fall in income. 
C)Ernest is more risk-averse than Salvatore. 
D)If either Ernest or Salvatore buys insurance,adverse selection will occur.

Quizplus · Accepted Answer

The Answer of Use the following to answer question:
Figure: Differences in Risk Aversion 
-(Figure: Differences in Risk Aversion)Use Figure: Differences in Risk Aversion.Which statement is CORRECT?
A)Ernest will gain more utility from insurance than will Salvatore. 
B)Salvatore will gain less utility from an increase in income than will Ernest but will lose more utility than will Ernest from a fall in income. 
C)Ernest is more risk-averse than Salvatore. 
D)If either Ernest or Salvatore buys insurance,adverse selection will occur.

Use the Following to Answer Question