Author Question: Blanca would prefer a certain income of 20,000 to a gamble with a 0.5 probability of 10,000 and a ... (Read 91 times)

krzymel · **on:** Jul 1, 2018

Blanca would prefer a certain income of 20,000 to a gamble with a 0.5 probability of 10,000 and a 0.5 probability of 30,000. Based on this information:

A) we can infer that Blanca neutral.
B) we can infer that Blanca is risk averse.
C) we can infer that Blanca is risk loving.
D) we cannot infer Blanca's risk preferences.

Question 2

Assume that steak and potatoes are complements. When the price of steak goes up, the demand curve for potatoes:

A) shifts to the left.
B) shifts to the right.
C) remains constant.
D) shifts to the right initially and then returns to its original position.