Consider the following scenario to answer the questions that follow.
Ivett and Brenda are considering playing a game called Twenties Versus Fifties. In this game, Ivett will place a $20 bill on the table, and Brenda will place a $50 bill on the table. Both players will then toss a fair coin. If both Ivett and Brenda toss heads or if they both toss tails, Ivett wins the $70 on the table. If one woman tosses heads and the other tosses tails, Brenda wins the $70 on the table.
-For Ivett to be willing to play this game,Ivett would need to be ________.For Brenda to be willing to play this game,Brenda would need to be ________.
A) risk averse; risk averse
B) risk averse; risk neutral
C) risk neutral; a risk taker
D) a risk taker; risk neutral
E) a risk taker; risk averse

Question

Quizplus · Accepted Answer

Ivett would need to be risk neutral because she is risking $20 for a potential gain of $70 with a 50% chance of winning. Brenda would need to be a risk taker because she is risking $50 for the same potential gain with a 50% chance of winning.

Consider the Following Scenario to Answer the Questions That Follow