41.Ifapersonisriskaverse,thenshehas
a.diminishingmarginalutilityofwealth,implyingthatherutilityfunctiongetsflatteraswealthincreases.
b.diminishingmarginalutilityofwealth,implyingthatherutilityfunctiongetssteeperaswealthincreases.
c.increasingmarginalutilityofwealth,implyingthatherutilityfunctiongetsflatteraswealthincreases.
d.increasingmarginalutilityofwealth,implyingthatherutilityfunctiongetssteeperaswealthincreases.
42.IfAlanisrisk-averse,thenhewillalways
a.choosenottoplayagamewherehehasa50percentchanceofwinning$5anda50percentchanceoflosing$5.
b.choosenottoplayagamewherehehasa75percentchanceofwinning$5anda25percentchanceoflosing$5.
c.choosetoplayagamewherehehasa55percentchanceofwinning$5anda45percentchanceoflosing
d.Alloftheabovearecorrect.
43.Whichofthefollowinggamesmightarisk-aversepersonplay?
a.agamewhereshehasa50percentchanceofwinning$1anda50percentchanceoflosing$1
b.agamewhereshehasa50percentchanceofwinning$100anda50percentchanceoflosing$100
c.agamewhereshehasa60percentchanceofwinning$1anda40percentchanceoflosing$1
d.agamewhereshehasa40percentchanceofwinning$1anda60percentchanceoflosing$1
44.Whichofthefollowinggamesmightarisk-aversepersonplay?
a.agamewhereshehasa70percentchanceofwinning$1anda30percentchanceoflosing$1
b.agamewhereshehasa60percentchanceofwinning$100anda40percentchanceoflosing$100
c.agamewhereshehasa60percentchanceofwinning$2anda40percentchanceoflosing$1
d.Alloftheabovearecorrect.
45.Whichofthefollowingiscorrectconcerningarisk-averseperson?
a.Shewouldnotplaygameswheretheprobabilityofwinningandlosingadollararethesame.
b.Shemightnotbuyhealthinsuranceifshethinksherrisksarelow.
c.Hermarginalutilityofwealthdecreasesasherincomeincreases.
d.Alloftheabovearecorrect.
46.Svetlanaisriskaverse.WhichofthefollowingiscorrectaboutSvetlana?
a.Hermarginalutilityofwealthincreasesasherincomeincreases.
b.Shewillalwaysacceptabetiftheprobabilityofwinningadollaristhesameastheprobabilityoflosingadollar.
c.Herutilityfunctionisastraightline.
d.Noneoftheabovearecorrect.
47.Theutilityfunctionofarisk-aversepersonhasa
a.positiveslopeandgetssteeperaswealthincreases.
b.positiveslopebutgetsflatteraswealthincreases.
c.negativeslopebutgetssteeperaswealthincreases.
d.negativeslopeandgetsflatteraswealthincreases.
48.Arisk-aversepersonhas
a.utilityandmarginalutilitycurvesthatslopeupward.
b.utilityandmarginalutilitycurvesthatslopedownward.
c.autilitycurvethatslopesdownandamarginalutilitycurvethatslopesupward.
d.autilitycurvethatslopesupwardandamarginalutilitycurvethatslopesdownward.
49.Diminishingmarginalutilityofwealthimpliesthattheutilityfunctionis
a.upward-slopingandhasdecreasingslope.
b.upward-slopingandhasincreasingslope.
c.downward-slopingandhasdecreasingslope.
d.downward-slopingandhasincreasingslope.
50.Ifapersonisriskaverse,thenaswealthincreases,totalutilityofwealth
a.increasesatanincreasingrate.
b.increasesatadecreasingrate.
c.decreasesatanincreasingrate.
d.decreasesatadecreasingrate.
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