What is the difference between the utility function of a risk averse person and a risk neutral person
The utility function of a risk averse person is an upward rising curve concave to the wealth axis. The utility function of a risk neutral person is an upward sloping straight line.
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The figure above shows the market for umbrellas in Sunville. When the market for umbrellas in Sunville is in equilibrium, what is the total surplus?
A) $0 B) $12,000 C) $24,000 D) $16,000
For products like parking lots and hotels, costs of building capacity are mostly fixed or sunk and firms in this industry typically face capacity constraints. Therefore,
a. If SRMR>SRMC at capacity, then the firms should price to fill capacity
b. If SRMR