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shepuryov [24]
3 years ago
15

The shape of your utility function implies that you are arisk-averse individual, and, therefore, youwould accept the wager becau

se the difference in utility between A and C isless than 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. 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. Risk-averse people overestimate the probability of losing money. The utility function of a risk-averse person exhibits the law of diminishing marginal utility.
Business
1 answer:
Furkat [3]3 years ago
8 0

<u>Solution and Explanation:</u>

As the utility function is concave in shape, so person is risk averse.  Thus, he will not accept the gamvle.

The difference between utility at point A&C = 70 minus 65 = $5, is less than a the difference between A&B = 65 minus 55 = $10

<u>MCQ: </u>

Answer is option a&d  - risk averse people fear a lot for losing money, thus they overestimate the probability of loss

Since, shape of utility function is concave, hence the double derivative of utility with respect to wealth is negative, so utility falls at an decreasing rate , as wealth increases

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2 years ago
Use the following data to determine the total amount of working capital.
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$353,800

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Working Capital = Current Assets - Current Liabilities

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3 years ago
You consider buying a share of stock at a price of $25. The stock is expected to pay a dividend of $1 next year, and your adviso
nikklg [1K]

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5%

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4 0
3 years ago
At the beginning of 2018, England Dresses has an inventory of $140,000. However, management wants to reduce the amount of invent
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Answer:

purchases = 160000

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Cost of goods sold = opening inventory + purchases - closing inventory  

so put here value

240000 = 140000 + purchases - 60000

so purchases = 160000

7 0
3 years ago
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