A Given Person Is Risk Loving Through All Relevant Levels

question 35

Multiple Choice

A given person is risk loving through all relevant levels of income.This person, facing the prospect of receiving an extra $5,000 with probability 0.5 and losing $5,000 with probability 0.5, would be willing to buy:

• A)more insurance to avoid the risk than if the probabilities were 0.25 and 0.75 of receiving the extra $5,000 and losing $5,000, respectively.
• B)less insurance to avoid the risk than if the probabilities were 0.25 and 0.75 of receiving the extra $5,000 and losing $5,000, respectively.
• C)the same amount of insurance to avoid the risk than if the probabilities were 0.25 and 0.75 of receiving the extra $5,000 and losing $5,000, respectively.
• D)no insurance to avoid the risk even if the probabilities were 0.25 and 0.75 of receiving the extra $5,000 and losing $5,000, respectively.
• E)up to $10,000 in insurance if the probability of loss were sufficiently high.

---

Definitions:

Prone Position

Lying face down.

Suction Machine

A medical device used to remove bodily fluids such as mucus or blood from a patient's airway to prevent obstruction and support breathing.

Diabetic Ketoacidosis

A serious diabetes complication where the body produces excess blood acids (ketones) due to a lack of insulin, requiring urgent medical treatment.

Neck Injury

Damage or harm inflicted to the neck area, which may result from accidents, physical activity, or other causes, potentially affecting mobility and function.