Figure 5.2.3
-The individual pictured in Figure 5.2.3:
A) would pay a risk premium of 2 utils to avoid facing the two outcomes.
B) would want to be paid a risk premium of 2 utils to give up the opportunity of facing the two outcomes.
C) would pay a risk premium of $1000 to avoid facing the two outcomes.
D) would want to be paid a risk premium of $1000 to give up the opportunity of facing the two outcomes.
E) has a risk premium of 2 utils.

Question

Figure 5.2.3
-The individual pictured in Figure 5.2.3:
A) would pay a risk premium of 2 utils to avoid facing the two outcomes. 
B) would want to be paid a risk premium of 2 utils to give up the opportunity of facing the two outcomes. 
C) would pay a risk premium of $1000 to avoid facing the two outcomes. 
D) would want to be paid a risk premium of $1000 to give up the opportunity of facing the two outcomes. 
E) has a risk premium of 2 utils.

Quizplus · Accepted Answer

The Answer of  Figure 5.2.3
-The individual pictured in Figure 5.2.3:
A) would pay a risk premium of 2 utils to avoid facing the two outcomes. 
B) would want to be paid a risk premium of 2 utils to give up the opportunity of facing the two outcomes. 
C) would pay a risk premium of $1000 to avoid facing the two outcomes. 
D) would want to be paid a risk premium of $1000 to give up the opportunity of facing the two outcomes. 
E) has a risk premium of 2 utils.

Figure 5.2.3 -The Individual Pictured in Figure 5.2.3