Refer to Scenario 5.10. Hillary's indifference curves showing her preferences toward risk and return can be shown in a diagram. Expected return is plotted on the vertical axis and standard deviation of return on the horizontal axis.
Although her indifference curves are upward sloping and bowed downward, their slope is very gradual (they are almost horizontal). These indifference curves reveal that Hillary is: A) risk neutral.
B) risk averse.
C) risk loving.
D) irrational.
Question 2
The income elasticity of demand is the
A) absolute change in quantity demanded resulting from a one unit increase in income.
B) percent change in quantity demanded resulting from the absolute increase in income.
C) percent change in quantity demanded resulting from a one percent increase in income.
D) percent change in income resulting from a one percent increase in quantity demanded.
E) percent change in income resulting from a one percent increase in price.
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