Multiple Choice
Someone who is risk averse
A) suffers a reduction in utility if their wealth declines by €100 that is smaller than the gain in utility they would obtain if their wealth increased by €100.
B) suffers a reduction in utility if their wealth declines by €100 that is larger than the gain in utility they would obtain if their wealth increased by €100.
C) will always buy insurance against all risks they face, regardless of the price of insurance.
D) is irrational.
Correct Answer:
Verified
Correct Answer:
Verified
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