Figure 27-2
The following figure shows a utility function for Alex.
-Refer to Figure 27-2. From the appearance of Alex's utility function, we know that
A)if Alex owns a house, then he definitely would buy fire insurance provided the cost of the insurance was reasonable.
B)Alex would voluntarily exchange a portfolio of stocks with a high average return and a high level of risk for a portfolio with a low average return and a low level of risk.
C)Alex is risk averse.
D)Alex is not risk averse.

Question

Figure 27-2
The following figure shows a utility function for Alex. 
-Refer to Figure 27-2. From the appearance of Alex's utility function, we know that
A)if Alex owns a house, then he definitely would buy fire insurance provided the cost of the insurance was reasonable. 
B)Alex would voluntarily exchange a portfolio of stocks with a high average return and a high level of risk for a portfolio with a low average return and a low level of risk. 
C)Alex is risk averse. 
D)Alex is not risk averse.

Quizplus · Accepted Answer

The Answer of Figure 27-2
The following figure shows a utility function for Alex. 
-Refer to Figure 27-2. From the appearance of Alex's utility function, we know that
A)if Alex owns a house, then he definitely would buy fire insurance provided the cost of the insurance was reasonable. 
B)Alex would voluntarily exchange a portfolio of stocks with a high average return and a high level of risk for a portfolio with a low average return and a low level of risk. 
C)Alex is risk averse. 
D)Alex is not risk averse.

Figure 27-2 The Following Figure Shows a Utility Function for Alex