Use the following to answer questions:
-(Table: Utility for Terri and Mary) Look at the table Utility for Terri and Mary. Each has an income of $300. If each were offered insurance to offset the risk of falling income, _____ would pay a larger premium because she is the consumer with _____ risk aversion.
A) Terri; more
B) Terri; less
C) Mary; more
D) Mary; less

Question

Use the following to answer questions: 
-(Table: Utility for Terri and Mary) Look at the table Utility for Terri and Mary. Each has an income of $300. If each were offered insurance to offset the risk of falling income, _____ would pay a larger premium because she is the consumer with _____ risk aversion.
A) Terri; more 
B) Terri; less 
C) Mary; more 
D) Mary; less

Quizplus · Accepted Answer

Terri is the consumer with more risk aversion because she is willing to pay a larger premium to offset the risk of falling income.

Use the Following to Answer Questions