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Figure: Risk Aversion
-(Figure: Risk Aversion) Look at the figure Risk Aversion. Bob and Nancy have the same income and total utility. Nancy will be willing to pay a ____ insurance premium than Bob because she is _____ risk-averse.
A) higher; more
B) lower; more
C) lower; less
D) higher; less

Question

Use the following to answer questions:
Figure: Risk Aversion 
-(Figure: Risk Aversion) Look at the figure Risk Aversion. Bob and Nancy have the same income and total utility. Nancy will be willing to pay a ____ insurance premium than Bob because she is _____ risk-averse.
A) higher; more 
B) lower; more 
C) lower; less 
D) higher; less

Quizplus · Accepted Answer

Nancy is more risk-averse, meaning she values certainty more and is willing to pay a higher premium to avoid risk compared to Bob.

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