Economists Have Developed Models of Risk Aversion Using the Concept

question 24

Multiple Choice

Economists have developed models of risk aversion using the concept of

• A)utility and the associated assumption of diminishing marginal utility.
• B)utility and the associated assumption of increasing marginal utility.
• C)income and the associated assumption of diminishing marginal wealth.
• D)income and the associated assumption of increasing marginal wealth.

---

Definitions:

Two-Part Tariff

A pricing method that involves a fixed fee plus a variable charge based on the quantity of goods or services consumed.

Peak-Load Pricing

Peak-load pricing is a pricing strategy where prices are higher during periods of high demand and lower during periods of low demand to manage demand and maximize profits.

Intertemporal Price Discrimination

A pricing strategy where businesses charge different prices for the same product or service at different times to maximize profits.

Vacation Packages

Pre-arranged travel plans combining elements like accommodation, transportation, and activities into a single purchase, often offering cost savings.