An individual's Utility function is concave with respect to income. This implies that:
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1 mark, −0.33MicroeconomicsChoice under uncertaintyRisk aversion, certainty equivalent and risk premiumEasyabout 1 min
UoH 2012 Question 57: Choice under uncertainty
Answer and worked solution
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Choice under uncertainty has come up 27 times in 7 exams since 2007.
What this question tests
This question is on Risk aversion, certainty equivalent and risk premium, part of Choice under uncertainty in Microeconomics.
How the shape of utility reveals attitude to risk and how much a person would pay to avoid it.
TestStop has 16 past-paper questions on this subtopic; the nearest in year are below.
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Question from the UoH 2012 paper. Solutions are TestStop's own. Not affiliated with or endorsed by any examination authority.