Question

risk friendly / risk-averse

would / would not

greater than / less than

5. Understanding risk aversion Suppose your fr end Gilberto offers you the following bet: He will flip、coin and pay you S3,000 if it lands heads up and collect S3 000 from you if it lands tails up. Currently, your level of wealth is $9,000. The graph shows your uility function from wealth. Use the graph to answer te ollowing questions 83 60 43 2D WEALTH (Thoueards cr dolars) individual, and, therefore, you The shape of your utility function implies that you are a wager because the difference in utility between A and C is_ accept the the difference between C and B 63 43 20 WEALTH (Thousands f dalars) individual, and, therefore, you The shape of your utility function implies that you are a wager because the difference in utility between A and C is accept the the difference between Cand B Which of the following best explain why the pain of losing $3,000 exceeds the pleasure of winning $3,000D for risk-averse people? check afl that apply. The more wealth that risk-averse people have, the less satisfaction they recelve from an additional dollar The utility function of a risk-averse person exhibits the law of diminishing marginal utility. Risk-averse people overestimate the probability of losing moncy Risk-averse people are relatively poor and cannot afTord to lose any money Grade It Now Save & Continue Continun without saving

Answer 1

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