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Author Question: If a person is risk averse, then she has negative marginal utility of wealth. Indicate whether ... (Read 58 times)

tichca

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on: Jul 1, 2018
If a person is risk averse, then she has negative marginal utility of wealth.
 
  Indicate whether the statement is true or false

Question 2

Risk premium is the ________ amount that a ________ person would pay to avoid ________.
 
  A) maximum; risk-averse; taking a risk
  B) maximum; risk-neutral; losing everything
  C) minimum; risk-averse; taking a risk
  D) minimum; risk-loving; losing everything
Microeconomics ¦ Perloff ¦ 8th Edition
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Sassygurl126

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Reply #1 on: Jul 1, 2018
Answer to Question 1

False. The marginal utility of wealth is positive for the risk-averse person; however, marginal utility diminishes as wealth increases.

Answer to Question 2

A


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