Betty Gamble is willing to pay exactly,but not more than,$20 to get a deal where she has a 1/3 chance of winning $30 and a 1/6 chance of winning $6 and will win $20 otherwise.Betty is:

Question

Quizplus · Accepted Answer

Betty is willing to pay $20 to get a deal where she has a 1/3 chance of winning $30 and a 1/6 chance of winning $6, which means she values the potential winnings at no more than $20 (since she's willing to pay that much for the deal). This indicates that she is risk-averse, as she is not willing to pay more for the potential winnings than the cost of the deal. However, she is not profit-maximizing, as she is not willing to take on more risk to potentially win more money. Therefore, option B is the correct choice.

Betty Gamble Is Willing to Pay Exactly,but Not More Than,$20