Solved

A Given Person Is Risk Averse Through All Relevant Levels

Question 3

Multiple Choice

A given person is risk averse through all relevant levels of income.The expected utility of receiving an extra $5,000 with probability 0.5 and an extra $15,000 with probability 0.5 must be:


A) larger than the utility of receiving an extra $10,000 with certainty.
B) equal to the utility of receiving an extra $10,000 with certainty.
C) smaller than the utility of receiving an extra $10,000 with certainty.
D) larger than or equal to the utility of receiving an extra $10,000 with certainty, depending upon the initial level of income.
E) smaller than or equal to the utility of receiving an extra $10,000 with certainty, depending upon the initial level of income.

Correct Answer:

verifed

Verified

Related Questions

Unlock this Answer For Free Now!

View this answer and more for free by performing one of the following actions

qr-code

Scan the QR code to install the App and get 2 free unlocks

upload documents

Unlock quizzes for free by uploading documents