The Slope of the Utility Curves for a Strongly Risk-Averse

question 29

Multiple Choice

The slope of the utility curves for a strongly risk-averse investor,relative to the slope of the utility curves for a less risk-averse investor,will

• A) Be steeper.
• B) Be flatter.
• C) Be vertical.
• D) Be horizontal.
• E) None of the above.

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Definitions:

Fixed Expenses

Costs that do not change in total with changes in the volume of activity, such as rent, salaries, and insurance premiums.

Variable Expenses

Costs that change in proportion to the level of business activity or production volume.

Fixed Expenses

Fixed expenses are costs that do not change in the short term regardless of the level of production or sales, such as rent, salaries, and insurance premiums.

Margin Of Safety

The excess of budgeted (or actual) dollar sales over the break-even dollar sales.