Economics-Microeconomics

Business

Quiz 20 :

Uncertainty and Information

Quiz 20 :

Uncertainty and Information

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For a risk-averse individual, as wealth increases, total utility ________ and marginal utility ________.
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B

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The assumption that the marginal utility of wealth diminishes implies that
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C

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If Ringo is risk averse, at a wealth of $200,000 his utility of wealth curve has a ________ slope and his marginal utility of wealth is ________ than at a wealth of $100,000.
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C

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Jason is a Web page designer. He estimates that this summer, he has a 0.6 probability of making $10,000 and a 0.4 probability of making only $2,000. What is Jason's expected income this summer?
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For a risk-averse individual, as wealth increases, total utility
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The slope of the utility of wealth curve of a risk-averse person
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Diminishing marginal utility of wealth leads to risk aversion because at a given level of wealth a dollar gained
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You took a summer job as a salesperson in a shoe store with the knowledge that you will either make $2,000 or $3,500 with probabilities 0.4 and 0.6 respectively. What is your expected income for the summer job?
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Pedro's utility of wealth is 6 units for $10,000 and 10 units for $20,000. A friend gave him a lottery ticket for his birthday. The ticket won, giving him either $10,000 with probability 0.5 or $20,000 with probability 0.5. Pedro's expected utility from the lottery ticket is
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If an individual has a 0.3 probability of receiving $10 and a 0.7 probability of receiving $20, the expected income is
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Expected wealth is a weighted average in which the weights are
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Assuming that the marginal utility of wealth diminishes implies that
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For a risk averse person, an increase in wealth brings ________ total utility of wealth and ________ marginal utility of wealth.
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Expected utility is a weighted average in which the weights are
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A risk averse person's utility of wealth curve has a
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An increase in Todd's wealth from $2 million to $4 million raises his utility from 400 units to 500 units. If he has a utility of wealth curve with the typical shape showing risk aversion, then with a wealth of $6 million his utility might be
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An increase in Meta's wealth from $3,000 to $6,000 raises her utility from 80 units to 100 units. If she is risk averse, with a wealth of $9,000 her utility might be
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George is considering buying shares of Intel. If the company does well, he will gain $100, but if the company does poorly, he will lose $100. George is risk averse, so for George the magnitude of the pain of losing $100 will ________ the pleasure of gaining $100.
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A risk-averse person's marginal utility of wealth
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For a risk averse person, the marginal utility of wealth
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