Figure: Risk Aversion (Figure: Risk Aversion) Bob and Nancy Have the Same Income

question 185

Multiple Choice

Figure: Risk Aversion
(Figure: Risk Aversion) Bob and Nancy have the same income and total utility.The figure Risk Aversion shows their individual utility functions.Based on the information presented in the figure, which of the following is true?

• A)Nancy will be willing to pay a higher insurance premium because she is more risk-averse than Bob.
• B)Nancy will be willing to pay a lower insurance premium because she is more risk-averse than Bob.
• C)Bob will be willing to pay a higher insurance premium because he is more risk-averse than Nancy.
• D)Nancy will be willing to pay a lower insurance premium because Bob is more risk-averse than she is.

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Definitions:

Pulmonary Capillaries

Tiny blood vessels located within the lungs where gas exchange, including the uptake of oxygen and release of carbon dioxide, occurs.

Oxyhemoglobin-Dissociation Curve

A graph showing the relationship between the partial pressure of oxygen and the saturation of hemoglobin with oxygen.

Body Temperature

The measure of the body's ability to generate and get rid of heat, vital for maintaining metabolic processes.

Carbon Monoxide

A colorless, odorless, and toxic gas produced by incomplete combustion of carbon-containing materials.