Figure 19-3

question 30

Multiple Choice

Figure 19-3.The figure shows a utility function for Rob.
-Refer to Figure 19-3.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:

The Antitrust Division

A section of the government responsible for promoting and maintaining market competition by preventing anti-competitive practices.

Price Discrimination

A pricing strategy where a seller charges different prices for the same product or service to different buyers, not based on costs.

Basic Economy

A term often used in the airline industry referring to the most cost-effective and no-frills class of service available to passengers.

Sherman Antitrust Act

A landmark federal statute passed in the United States in 1890 that prohibits monopolistic business practices and supports competitive markets.