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A Given Person Is Risk Loving Through All Relevant Levels

Question 14

Multiple Choice

A given person is risk loving 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.

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