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test2_2009 - ECO2003F INTERMEDIATE MICROECONOMICS TEST 2 20...

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ECO2003F: INTERMEDIATE MICROECONOMICS TEST 2 20 April 2009 z This test is comprised of 20 multiple choice questions and has 7 pages including the cover page. z Questions that are correctly answered will earn you 4 marks, while each incorrectly answered question attracts a penalty of 1 negative mark. z In all of the cases below, choose the MOST correct answer
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1. The utility function of wealth for a risk-seeker has (A) an increasing slope as wealth rises (B) a decreasing slope as wealth rises (C) a constant slope as wealth rises (D) a concave shape (E) both (B) and (D) are correct 2. We can be sure that a person is risk averse if 3. Competitive pressure in the insurance market will, in general, (A) Make insurance premiums unattractive to drivers who are much riskier than average (B) Make insurance premiums attractive to low risk drivers (C) Induce risky drivers to self-insure (D) Induce the least risky drivers to self-insure (E) Both (A) and (C) are correct 4. John purchases an insurance policy on his squash racquet. He then proceeds to hit his racquet against the wall every time he loses a point. This is an example of
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