The shape of your utility function implies that you are a because the difference in utility between A and C is individual, and, therefore, you the difference between C and B. Which of the following best explain why the pain of losing $3,000 exceeds the pleasure of winning $3,000 for risk-averse people? Check all that apply. Risk-averse people overestimate the probability of losing money. Risk-averse people are relatively poor and cannot afford to lose any money. accept the wager The more wealth that risk-averse people have, the less satisfaction they receive from an additional dollar. The more wealth that risk-averse people have, the more satisfaction they receive from an additional dollar.
The shape of your utility function implies that you are a because the difference in utility between A and C is individual, and, therefore, you the difference between C and B. Which of the following best explain why the pain of losing $3,000 exceeds the pleasure of winning $3,000 for risk-averse people? Check all that apply. Risk-averse people overestimate the probability of losing money. Risk-averse people are relatively poor and cannot afford to lose any money. accept the wager The more wealth that risk-averse people have, the less satisfaction they receive from an additional dollar. The more wealth that risk-averse people have, the more satisfaction they receive from an additional dollar.
Chapter10: Consumer Choice Theory
Section: Chapter Questions
Problem 9P
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Question
100%
![Suppose your friend Yvette offers you the following bet: She will flip a coin and pay you $3,000 if it lands heads up and collect $3,000 from
you if it lands tails up. Currently, your level of wealth is $9,000. The graph shows your utility function from wealth. Use the graph to answer
the following questions.
UTILITY (Units of utility)
100
90
80
70
60
50
40
30
20 +
10
0 O
0
3
**
6
с
B
9
WEALTH (Thousands of dollars)
12
The shape of your utility function implies that you are a
because the difference in utility between A and C is
15
?
individual, and, therefore, you
the difference between C and
accept the wager
Which of the following best explain why the pain of losing $3,000 exceeds the pleasure of winning $3,000 for risk-averse people? Check all that
apply.
Risk-averse people overestimate the probability of losing money.
Risk-averse people are relatively poor and cannot afford to lose any money.
The more wealth that risk-averse people have, the less satisfaction they receive from an additional dollar.
The more wealth that risk-averse people have, the more satisfaction they receive from an additional dollar.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fd7b6ce77-7d1f-42c7-90fc-6e082dc1db1b%2F1ef3a097-0c44-4e38-a267-ce2863df9d62%2Flkpfp1o_processed.png&w=3840&q=75)
Transcribed Image Text:Suppose your friend Yvette offers you the following bet: She will flip a coin and pay you $3,000 if it lands heads up and collect $3,000 from
you if it lands tails up. Currently, your level of wealth is $9,000. The graph shows your utility function from wealth. Use the graph to answer
the following questions.
UTILITY (Units of utility)
100
90
80
70
60
50
40
30
20 +
10
0 O
0
3
**
6
с
B
9
WEALTH (Thousands of dollars)
12
The shape of your utility function implies that you are a
because the difference in utility between A and C is
15
?
individual, and, therefore, you
the difference between C and
accept the wager
Which of the following best explain why the pain of losing $3,000 exceeds the pleasure of winning $3,000 for risk-averse people? Check all that
apply.
Risk-averse people overestimate the probability of losing money.
Risk-averse people are relatively poor and cannot afford to lose any money.
The more wealth that risk-averse people have, the less satisfaction they receive from an additional dollar.
The more wealth that risk-averse people have, the more satisfaction they receive from an additional dollar.
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