This preview shows page 1. Sign up to view the full content.
Unformatted text preview: ealth level of M=100. He is offered a fair gamble, in which he has the opportunity to double his existing wealth. 18. Diego is: [Pen. 0.5] A. Risk‐averse B. Risk neutral C. A fair gambler D. Risk loving E. Abstain 19. The expected utility of the gamble is [Pen. 0.5] A. 0 B. 100 C. 20000 D. 40000 E. Abstain 20. The certainty equivalent associated with this gamble is: [Pen. 1] A. 200 B. 141.42 C. 100 D. 0 E. Abstain 21. Many desirable people avoid dating services because they view the process as subject to: [Pen. 0.5] A. Adverse selection B. The full disclosure principle C. Statistical discrimination. D. Conspicuous consumption E. Abstain 11 Use the information and diagram to answer questions 22 and 23. Bob has an initial wealth of R15000. He uses all of this money to buy a car worth R15000. 22. From the graph above, it is clear that Bob is: [Pen. 0.5] A.
E. Risk averse Risk loving Risk neutral It is not possible to determine risk preferences from the graph Abstain 23. There is a 50% cha...
View Full Document
This note was uploaded on 05/23/2011 for the course ECON 203 taught by Professor Jules during the Spring '11 term at University of Cape Town.
- Spring '11