A Risk-Averse Person

question 254

Multiple Choice

A risk-averse person

• A) has a utility curve where the slope increases with wealth,and might take a bet with a 60 percent chance of wining $100 and a 40 per chance of losing $100.
• B) has a utility curve where the slope increases with wealth,and would never take a bet with a 60 percent chance of wining $100 and a 40 per cent chance of losing $100.
• C) has a utility curve where the slope decreases with wealth,and might take a bet with a 60 percent chance of wining $100 and a 40 per chance of losing $100.
• D) has a utility curve where the slope decreases with wealth,and would never take a bet with a 60 percent chance of wining $100 and a 40 per cent chance of losing $100.

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Definitions:

Total Variable Cost

The sum of all variable expenses that change in proportion with production output or business activity levels.

Contribution Margin

The amount by which sales revenue exceeds variable costs, indicating how much revenue contributes to fixed costs and profit.

Contribution Margin

The amount of revenue available after variable costs have been deducted, which contributes towards covering fixed costs and generating profit.

Selling Price

The price at which a business offers its product or service for sale to consumers, determined by various factors including cost and market demand.