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Author Question: The above figure shows the utility of wealth curve for a homeowner whose only possession is a 50,000 ... (Read 194 times)

savannahhooper

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on: Jun 29, 2018
The above figure shows the utility of wealth curve for a homeowner whose only possession is a 50,000 house. If there is a 20 percent chance that the home could be completely destroyed, would this homeowner buy insurance?
 
  A) No, because the homeowner is not risk averse.
  B) Yes, at any price because the homeowner is risk averse.
  C) Yes, but only if it costs less than 10,000.
  D) Yes, but only if it costs less than 20,000.

Question 2

In the figure above, when 20 units are produced the marginal cost is
 
  A) less than 8.
  B) 8.
  C) more than 8 and less than 16.
  D) None of the above answers is correct.


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djofnc

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Reply #1 on: Jun 29, 2018
Answer to Question 1

D

Answer to Question 2

A


savannahhooper

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Reply #2 on: Jun 29, 2018
Thank you :)


djofnc

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Reply #3 on: Jun 29, 2018
Happy to help you


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