Figure: Risk Aversion
(Figure: Risk Aversion) Bob and Nancy have the same income and the same total utility.The figure Risk Aversion shows their individual utility functions.Based upon this graph, which of the following is true?
A) Nancy is more risk-averse than Bob because her marginal utility curve is flatter than Bob's marginal utility curve.
B) Nancy is more risk-averse than Bob because her marginal utility curve is steeper than Bob's marginal utility curve.
C) Bob is more risk-averse than Nancy because his marginal utility curve is steeper than Nancy's marginal utility curve.
D) Bob is more risk-averse than Nancy because his marginal utility curve is flatter than Nancy's marginal utility curve.
Correct Answer:
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(Figure: Risk Aversion) Bob and
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