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Consider the quadratic utility function U(x) = x 2 . (a) (1 points) Sketch the shape of this function in a figure analogous to Figure 4.1. (b) (1 point) Does this function exhibit increasing or decreasing marginal utility? (c) (1 point) Is this shape indicative of risk aversion? (d) (1 point) Calculate the expected utilities for the safe and risky options in Decision 4 for Table 4.1, i.e., when the probabilities are equal to 0.4 and 0.6

Business Economics, Economics

  • Category:- Business Economics
  • Reference No.:- M91994695

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