Use the following to answer questions:
Figure: Differences in Risk Aversion
-(Figure: Differences in Risk Aversion) Look at the figure Differences in Risk Aversion. Which of the following statements is CORRECT?
A) Ernest will gain more utility from insurance than will Salvatore.
B) Salvatore will gain less utility from an increase in income than Ernest but will lose more utility than Ernest from a fall in income.
C) Ernest is more risk-averse than Salvatore.
D) If either Ernest or Salvatore buys insurance, adverse selection will occur.

Question

Use the following to answer questions:
Figure: Differences in Risk Aversion 
-(Figure: Differences in Risk Aversion) Look at the figure Differences in Risk Aversion. Which of the following statements is CORRECT?
A) Ernest will gain more utility from insurance than will Salvatore. 
B) Salvatore will gain less utility from an increase in income than Ernest but will lose more utility than Ernest from a fall in income. 
C) Ernest is more risk-averse than Salvatore. 
D) If either Ernest or Salvatore buys insurance, adverse selection will occur.

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The Answer of Use the following to answer questions:
Figure: Differences in Risk Aversion 
-(Figure: Differences in Risk Aversion) Look at the figure Differences in Risk Aversion. Which of the following statements is CORRECT?
A) Ernest will gain more utility from insurance than will Salvatore. 
B) Salvatore will gain less utility from an increase in income than Ernest but will lose more utility than Ernest from a fall in income. 
C) Ernest is more risk-averse than Salvatore. 
D) If either Ernest or Salvatore buys insurance, adverse selection will occur.

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