(Table: Utility for Terri and Mary) Terri and Mary Are

question 107

Multiple Choice

(Table: Utility for Terri and Mary) Terri and Mary are two consumers, each having an income of
$300.The table Utility for Terri and Mary shows the marginal utility that each consumer would receive at various levels above and below their income.Based upon this table, if each consumer were offered insurance to offset the risk of falling income, would pay a
Larger premium because he is the consumer with risk aversion.

• A)Terri; more
• B)Terri; less
• C)Mary; more
• D)Mary; less

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Definitions:

Biofeedback

A technique that teaches people to control bodily processes that are normally involuntary, such as heart rate, using monitoring devices that provide information on the state of those processes.

External Locus

A psychological attribute where individuals believe that their life events are mainly controlled by external forces or fate rather than their own actions.

Adaptation-level Phenomenon

A psychological principle stating that individuals adjust their expectations based on past experiences, which influences how they perceive new stimuli or situations.

Life Expectancy

The average period that an individual is expected to live, based on statistical averages of age, sex, and other demographic factors.