Author Question: Jessica must choose option A or option B. Option A gives her 10,000 for sure. Option B gives her ... (Read 204 times)

luminitza · **on:** Jun 29, 2018

Jessica must choose option A or option B. Option A gives her 10,000 for sure. Option B gives her 5,000 if a fair coin toss shows heads and 15,000 if it shows tails. If Jessica is risk averse her utility of wealth curve becomes

A) flatter as her wealth increases and she will choose option A.
B) flatter as her wealth increases and she will choose option B.
C) steeper as her wealth increases and she will choose option A.
D) steeper as her wealth increases and she will choose option B.

Question 2

In the figure above, the Lorenz curve that shows the richest 20 percent of households receiving 40 percent of all income is

A) curve A.
B) curve B.
C) curve C.
D) curve D.