Suppose Option a Has a Higher Variance Than Option B

question 79

Multiple Choice

Suppose option A has a higher variance than option B.Which of the following statements is,in general,true?

• A)A risk-neutral person is indifferent between options A and B.
• B)A risk-averse person prefers option B to option A.
• C)A risk-averse person prefers option A to option B.
• D)There is insufficient information to determine which is true.

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Definitions:

Economic Thought

The evolution and diversity of ideas and philosophies regarding how economies operate and should be managed.

Landlord's Claim

The rights or interest a landlord holds in a property, including the right to receive rent and enforce lease terms.

Price Ceiling

Government-imposed maximum legal price.

Price Floor

Government-imposed minimum price (used almost exclusively to keep agricultural commodity prices up).