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:

Commodity Money

Anything that serves both as money and as a commodity; money that has intrinsic value such as gold or silver coins.

Double Coincidence

A situation in a barter system where two parties each hold an item the other wants, necessitating an exact match to complete an exchange.

Trade

The exchange of goods, services, or both between countries or individuals, allowing for the specialization and efficiency benefits.

Relative Values

A measure of the worth or importance of one thing in comparison to another, often used in economics to compare the value of different commodities or services.