if u(y) denotes an individuals utility of having income, then R= -yu''(y)/u'(y) ' means prime is the coefficient of relative risk aversion. (Ra = R/y...
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if u(y) denotes an individuals utility of having income, then


R= -yu''(y)/u'(y)

' means

prime


is the coefficient of relative risk aversion. (Ra = R/y is the degree of absolute risk aversion.) Compute R for the following utility functions (where A1, A2, and p are positive constants with p does not equal 1, and we assume that y>0:


A). u(y) = A1-A2y^-2

B). u(y) = A1+ A2y^(1-p)/(1-p)

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A) Utility function is given as: u ( y ) = A 1 A 2 y 2 First and second order derivative can be... View the full answer

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