In constructing a utility curve
A)a comparison is made of the different amounts of money at different times.
B)the certainty of a certain amount is compared with the willingness to gamble that amount on a larger amount.
C)one takes the risk out of gambling.
D)inflation plays a critical part in the evaluation.

Question

Quizplus · Accepted Answer

A utility curve compares the certainty of receiving a certain amount of money with the willingness to take a gamble on receiving a larger amount of money. It is a way of measuring an individual's risk aversion and determining their preference between certain and uncertain outcomes. The other options given are not relevant to constructing a utility curve.

In Constructing a Utility Curve