A person is risk averse if
A) His consumption bundle lies at the tangency of the indifference curve and the constant expected consumption line
B) He views variability as a bad thing
C) For a given level of expected consumption, he prefers the risk less bundle to the risky one
D) All of the above

Question

Quizplus · Accepted Answer

A) A risk-averse person's consumption bundle lies at the tangency of the indifference curve and the constant expected utility line because they want to maximize their utility while avoiding risks.
B) Risk-averse individuals view variability as a bad thing because they prefer to minimize potential losses or negative outcomes.
C) For a given level of expected consumption, risk-averse individuals prefer the riskless bundle to a risky one because they avoid risks and prefer a predictable outcome. Therefore, all of the above options are true for risk-averse individuals.

A Person Is Risk Averse If