An Individual Is More Likely to Reject a Risk- Pooling

question 14

Multiple Choice

An individual is more likely to reject a risk- pooling arrangement if:

• A)he or she experiences rising marginal utility of wealth.
• B)he or she is risk loving.
• C)he or she is risk averse.
• D)he or she experiences decreasing marginal utility of wealth.

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Definitions:

Market Demand

The total demand for a product or service aggregated across all individuals in the market at various price levels.

Short-Run Costs

Costs that vary depending on the level of production or output in the short term, where some factors of production are fixed.

Zero Economic Profits

A situation in which a firm's total revenues are exactly equal to its total costs, including opportunity costs, indicating neither an economic profit nor loss.

Long-Run Equilibrium

A market state where all producers and consumers have fully adjusted to all changes, and there are no forces causing further adjustments.