Use the Following to Answer Questions

question 163

Multiple Choice

Use the following to answer questions:
Figure: Differences in Risk Aversion
-(Figure: Differences in Risk Aversion) Look at the figure Differences in Risk Aversion. An important reason Ernest and Salvatore may differ in their aversion to risk is:

• A) the way their marginal utility is affected by income.
• B) their understanding of risk.
• C) their initial wealth holding or initial income level.
• D) the way their marginal utility is affected by income and their initial wealth holding or initial income level.

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Definitions:

Alcohol

Any organic compound where the hydroxyl functional group (–OH) is bound to a carbon atom.

Aldehydes

Organic compounds characterized by the functional group -CHO, where the carbon atom is double bonded to oxygen and single bonded to hydrogen.

Functional Group

A specific grouping of atoms within a molecule that has a characteristic chemical behavior and properties.

R-(C=O)H

A general formula representing aldehydes, organic compounds where the carbonyl group is bonded to a hydrogen atom.