If people are risk averse, then ?
Correct answer: B. All of these answers are true
- A. None of these answers are true
- B. All of these answers are true
- C. They dislike bad things more than the like comparable good things
- D. The utility they would lose from losing a Rs50 bet would exceed the utility they would gain from winning a Rs 50 bet
- E. Their utility function exhibit the property of diminishing marginal utility of wealth
Explanation
Risk aversion is represented by a concave utility function, meaning diminishing marginal utility of wealth and a greater utility loss from a given loss than the utility gain from an equal gain. Thus the listed descriptions are treated as true, making all of them the intended answer.
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