Use the Following to Answer Questions

question 163

Multiple Choice

Use the following to answer questions:
Figure: Differences in Risk Aversion
-(Figure: Differences in Risk Aversion) Look at the figure Differences in Risk Aversion. An important reason Ernest and Salvatore may differ in their aversion to risk is:

• A) the way their marginal utility is affected by income.
• B) their understanding of risk.
• C) their initial wealth holding or initial income level.
• D) the way their marginal utility is affected by income and their initial wealth holding or initial income level.

---

Definitions:

Perceptual Selection

The process by which individuals filter and select environmental stimuli to pay attention to, based on various factors such as interests, background, and expectations.

Perceptual Selection

The process by which individuals filter and select information from their environment based on their preferences, beliefs, and past experiences.

Hand Gestures

Movements of the hands and arms used to convey messages or express emotions nonverbally.

Moutza

A traditional gesture of insult in Greek culture, involving the extension of all five fingers and presenting the palm towards someone.