The above figure shows Bob's utility function. He currently has $100 of wealth, but there is a 50% chance that it could all be stolen
The midpoint of the chord that runs from zero and intersects the utility function where wealth is 100, represents Bob's A) risk premium.
B) expected utility of receiving $50 with certainty.
C) expected utility of receiving $0 50% of the time and $100 50% of the time.
D) risk neutrality.
C
Economics
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