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Graphical illustration ( risk averse)

Graphical illustration ( risk averse). P. TU d > TU w As Mu d curve is to left of MU w curve. P d. MU w. P w. MU d. Q w. Q d. O. Ltrs of Water / Crts of Diamond. Total utility of income. Utility. U 3. c. TU. b. U 2. x. U 4. a. U 1. Income. O. 5,000. 8,000. 10,000.

brian-hartman
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Graphical illustration ( risk averse)

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  1. Graphical illustration ( risk averse) P TUd > TUw As Mud curve is to left of MUw curve Pd MUw Pw MUd Qw Qd O Ltrs of Water / Crts of Diamond.

  2. Total utility of income Utility U3 c TU b U2 x U4 a U1 Income O 5,000 8,000 10,000 15,000

  3. Risk neutral consumer Utility TU y Income O

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