Figure 27-2

question 113

Multiple Choice

Figure 27-2.The figure shows a utility function for Britney.
-Refer to Figure 27-2.From the appearance of the utility function,we know that

• A)if Britney owns a house,she would not consider buying fire insurance.
• B)Britney would prefer to hold a portfolio of stocks with an average return of 8 percent and a standard deviation of 2 percent to a portfolio of stocks with an average return of 8 percent and a standard deviation of 5 percent.
• C)Britney would prefer to hold a portfolio of stocks with an average return of 8 percent and a standard deviation of 5 percent to a portfolio of stocks with an average return of 6 percent and a standard deviation of 3 percent.
• D)All of the above are correct.

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Definitions:

Automobiles

Motor vehicles with four wheels designed to transport people; cars are the most common form of these.

Annual Crop

Plants that are sown, grow, are harvested, and die all in one growing season or year.

Supply Curve

A graphical representation that shows the relationship between the price of a good and the quantity of the good that producers are willing and able to sell.

Carrots

In a metaphorical sense, incentives or rewards used to motivate behavior; in a literal sense, a root vegetable typically orange in color.