the slope of the utility of wealth curve of a risk-averse person A. Is constant
ID: 1214144 • Letter: T
Question
the slope of the utility of wealth curve of a risk-averse personA. Is constant B. Is negative C. Increases as wealth increases D. Decreases as wealth increases
Can one explain why the answer is D?
For a risk averse person, in increase in wealth brings blank #1, total utility of wealth and blank#2 marginal utility of wealth A. Lower; lower B. Lower; higher C. Higher; higher D. Higher; lower
I'm not sure why D. Is correct the slope of the utility of wealth curve of a risk-averse person
A. Is constant B. Is negative C. Increases as wealth increases D. Decreases as wealth increases
Can one explain why the answer is D?
For a risk averse person, in increase in wealth brings blank #1, total utility of wealth and blank#2 marginal utility of wealth A. Lower; lower B. Lower; higher C. Higher; higher D. Higher; lower
I'm not sure why D. Is correct the slope of the utility of wealth curve of a risk-averse person
A. Is constant B. Is negative C. Increases as wealth increases D. Decreases as wealth increases
Can one explain why the answer is D?
For a risk averse person, in increase in wealth brings blank #1, total utility of wealth and blank#2 marginal utility of wealth A. Lower; lower B. Lower; higher C. Higher; higher D. Higher; lower
I'm not sure why D. Is correct
Explanation / Answer
1) (d) decreases as wealth increase because a risk averse person has diminishing marginal utility of wealth.
2)(d) higher,lower because utility function is concave picks the less risky choice if both choices have the same expected value.
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.