Suppose an individual has utility of wealth given by u(w) = w. a. Does this utility...

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Suppose an individual has utility of wealth given by u(w) = √w. a. Does this utility function exhibit positive marginal utility of wealth, i.e. is U'(w) > 0? What does this mean? b. Does this utility function exhibit increasing or decreasing marginal utility of wealth, i.e. is U" (w) > 0, or U" (w) < 0? What does this mean? Is this utility function consistent with risk aversion? Explain. d. Define what a risk premium is and why it is important. c. + Suppose an individual has utility of wealth given by u(w) = √w. a. Does this utility function exhibit positive marginal utility of wealth, i.e. is U'(w) > 0? What does this mean? b. Does this utility function exhibit increasing or decreasing marginal utility of wealth, i.e. is U" (w) > 0, or U" (w) < 0? What does this mean? Is this utility function consistent with risk aversion? Explain. d. Define what a risk premium is and why it is important. c. +

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Lets analyze the utility function uw w step by step a Positive Marginal Utility of Wealth MU To find the marginal utility take the derivative of the u... View the full answer