Chapter 15 Section Reviews 15.2

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. For an individual who experiences risk aversion, [___].

v(L) > m(L))
correct incorrect

m(L) < c(L) correct incorrect

c(L) < m(L) correct incorrect

c(L) > v(L) correct incorrect

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. Using Figure 15.3 as a starting point, suppose the gain is $400 (instead of $900) and the loss is $4 (instead of $64). The risk premium of the lottery is $[___].

117 correct incorrect

81 correct incorrect

198 correct incorrect

202
correct incorrect

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. For an individual who experiences risk neutrality, [___].

negative correct incorrect

zero
correct incorrect

positive correct incorrect

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. Using Figure 15.4 as a starting point, suppose the gain is $400 (instead of $900) and the loss is $4 (instead of $64). The certainty equivalent of the lottery is $[___] and the risk premium is [___].

117, 81 correct incorrect

198, 0 correct incorrect

81, 117 correct incorrect

100, 202
correct incorrect

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. Comparative statics. The relationship between λ and risk aversion (as measured by the risk premium) is [___].

positive correct incorrect

zero
correct incorrect

negative correct incorrect

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. Comparative statics. Suppose the gain in a lottery is large relative to the loss. The relationship between μ and risk aversion (as measured by the risk premium) is [___].

80 correct incorrect

69 correct incorrect

75 correct incorrect

93 correct incorrect