Figure 14-3

question 41

Multiple Choice

Figure 14-3. The figure shows a utility function for Rob.
-Refer to Figure 14-3. From the appearance of Rob's utility function, we know that

• A)if Rob owns a house, then he definitely would buy fire insurance provided the cost of the insurance were reasonable.
• B)Rob would voluntarily exchange a portfolio of stocks with a high average return and a high level of risk for a portfolio with a low average return and a low level of risk.
• C)Rob is risk averse.
• D)Rob is not risk averse.

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Definitions:

Eldest Son

The firstborn male child in a family, often subject to specific rights, responsibilities, or inheritances in various cultures.

Inheritance

The practice of passing on property, titles, debts, rights, and obligations upon the death of an individual.

Castilian Monarchy

Refers to the monarchy of Castile, a significant kingdom in the Iberian Peninsula that played a central role in the unification of Spain and the Spanish Empire.

Cortes

A term that historically refers to the representative assemblies or parliaments in Spain and Portugal or their colonial territories.