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Macie Eaton
on Oct 14, 2024

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If someone has strictly convex preferences between all contingent commodity bundles, then he or she must be risk averse.

Strictly Convex Preferences

Strictly convex preferences indicate a consumer's increasing marginal rate of substitution, reflecting a stronger preference for balanced bundles of goods over extremes.

Risk Averse

A characteristic of a person or entity that prefers to avoid uncertainty and potentially negative outcomes, often opting for more certain or less risky options.

  • Understand the fundamental idea of risk aversion and how it dictates choice-making in unpredictable circumstances.
  • Identify the distinctions between different utility functions and their effects on risk predispositions.
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Louie AvergonzadoOct 18, 2024
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