Which of the Following Utility Functions Exhibits Constant Relative Risk $U ( W ) = W - 0.5 W ^ { 2 }$

question 6

Multiple Choice

Which of the following utility functions exhibits constant relative risk aversion?

• A)U(W)= W.
• B) \(U ( W ) = W - 0.5 W ^ { 2 }\)
• C)U(W)= ln W.
• D)U(W)= \(- e ^ { - W }\) .

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Definitions:

Dehydration

A state where the body loses more fluids than it takes in, leading to a deficiency in the amount of water and electrolytes, which can affect bodily functions.

Water Volume

The quantity of water present in a particular system, body, or area, often related to hydration status in medical contexts.

Intravascular

Situated within or occurring inside a blood vessel.

Transcellular

Pertaining to or occurring through the cells, often used to describe the movement of substances across cell membranes in body tissues.