A consumer who is risk averse is best characterized as _______________.
A)A consumer who may accept a risky prospect even if the expected gain is negative
B)A consumer who demands a positive expected gain as compensation for taking risk
C)A consumer who completely ignores risk and makes his/her decisions based solely on expected values
D)None of the above

Question

Quizplus · Accepted Answer

A risk averse consumer is someone who is not comfortable with taking risks and, therefore, requires a positive expected gain as compensation for taking on such risks. Option A describes a consumer who is not risk averse, while option C describes a consumer who is risk seeking. Option D is not a valid answer.

A Consumer Who Is Risk Averse Is Best Characterized as _______________