Figure: Differences in Risk Aversion (Figure: Differences in Risk

Multiple Choice

Figure: Differences in Risk Aversion (Figure: Differences in Risk Aversion) Look at the figure Differences in Risk Aversion.An important reason Ernest and Salvatore may differ in their aversion to risk is that they may differ in:

A) how their marginal utility is affected by income.
B) their understanding of risk.
C) their initial wealth holding or initial income level.
D) how their marginal utility is affected by income and in their initial wealth holding or initial income level.