Use the graph above to answer the following question. What can we conclude about the attitude towards risk this individual is portraying given this utility function?
What will be an ideal response?
The marginal utility of income is constant for all income levels. This would imply that the person is risk neutral.
You might also like to view...
The price elasticity of demand is calculated as the
A) percentage change in quantity demanded multiplied by the percentage change in price. B) percentage change in quantity demanded divided by the percentage change in price. C) percentage change in price divided by the percentage change in quantity demanded. D) percentage change in quantity demanded plus the percentage change in price.
The amount of foreign aid provided by the United States ________
A) constitutes a major proportion of federal government outlays B) is the highest in percentage terms for any developed market economy C) averages about 2.7 percent of U.S. income per year D) is a very small percentage of gross national income