This topic contains a solution. Click here to go to the answer
« previous next »

Author Question: What is the difference between the utility function of a risk averse person and a risk neutral ... (Read 225 times)

tsand2

  • Hero Member
  • *****
  • Posts: 520
on: Jun 30, 2018
What is the difference between the utility function of a risk averse person and a risk neutral person.

Question 2

Assume that deciding to do internally something that was once purchased from a company upstream offers a 10 percent return. What is the cost of this decision?
 A) 10 percent.
  B) less than 10 percent.
  C) What was given up to do it internally.
  D) Not enough information is provided.


Related Topics

Need homework help now?

Ask unlimited questions for free

Ask a Question
Marked as best answer by a Subject Expert

alvinum

  • Sr. Member
  • ****
  • Posts: 317
Reply #1 on: Jun 30, 2018
Answer to Question 1

The utility function of a risk averse person is an upward rising curve concave to the wealth axis. The utility function of a risk neutral person is an upward sloping straight line.

Answer to Question 2

C


tsand2

  • Member
  • Posts: 520
Reply 2 on: Jun 30, 2018
Wow, this really help

adammoses97

  • Member
  • Posts: 337
Reply 3 on: Yesterday
Thanks for the timely response, appreciate it

« previous next »
 

Did you know?

Stevens-Johnson syndrome and Toxic Epidermal Necrolysis syndrome are life-threatening reactions that can result in death. Complications include permanent blindness, dry-eye syndrome, lung damage, photophobia, asthma, chronic obstructive pulmonary disease, permanent loss of nail beds, scarring of mucous membranes, arthritis, and chronic fatigue syndrome. Many patients' pores scar shut, causing them to retain heat.

Did you know?

Vampire bats have a natural anticoagulant in their saliva that permits continuous bleeding after they painlessly open a wound with their incisors. This capillary blood does not cause any significant blood loss to their victims.

Did you know?

Excessive alcohol use costs the country approximately $235 billion every year.

Did you know?

The cure for trichomoniasis is easy as long as the patient does not drink alcoholic beverages for 24 hours. Just a single dose of medication is needed to rid the body of the disease. However, without proper precautions, an individual may contract the disease repeatedly. In fact, most people develop trichomoniasis again within three months of their last treatment.

Did you know?

Vital signs (blood pressure, temperature, pulse rate, respiration rate) should be taken before any drug administration. Patients should be informed not to use tobacco or caffeine at least 30 minutes before their appointment.

For some Americans, religion is an “easy-going, makes-little-difference” matter, as expressed in ... For some Americans, religion is an “easy-going, makes-little-difference” matter, as expressed in ...
A typical open-end wrench. Note the size difference on each end and that the head is angled 15 ... A typical open-end wrench. Note the size difference on each end and that the head is angled 15 ...
Risk & Aseptic Processing - RABs Filling Line Risk & Aseptic Processing - RABs Filling Line
For each function f(x) = 6x^2 - 4, estimate the instantaneous rate of change for the given ... For each function f(x) = 6x^2 - 4, estimate the instantaneous rate of change for the given ...
Increased Cancer Risk with BRCA1 or BRCA2 Mutation Increased Cancer Risk with BRCA1 or BRCA2 Mutation
Genome annotation of predicted biological function Genome annotation of predicted biological function
Video: Apicomplexan life cycle Animation

For a complete list of videos, visit our video library