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Managerial Economics · End Term · 10 May 2026 · January 2026 term · Set 1

Question 18: A risk-loving decision maker has the utility function U(…

Question 18

+2 marksOne or more correct options

Based on the above data, answer the given subquestions.

A risk-loving decision maker has the utility function U(I) = 25I2 where I denotes the payoff of the product.
Choose the correct alternative(s) for this risk-loving decision maker

Select all that apply.

  1. A

    Expected utility of investing in gourmet marmite is more than expected utility of investing in gourmet honey

  2. B

    A risk-loving decision maker prefers investing in gourmet honey to investing in gourmet marmite

  3. C

    Expected utility of investing in gourmet marmite is less than expected utility of investing in gourmet honey

  4. D

    A risk-loving decision-maker prefers investing in gourmet marmite to investing in gourmet honey

Show answer

Correct answers

  • A

    Expected utility of investing in gourmet marmite is more than expected utility of investing in gourmet honey

  • D

    A risk-loving decision-maker prefers investing in gourmet marmite to investing in gourmet honey

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Question 18 of 37 in the IIT Madras BS Managerial Economics (Managerial Economics) End Term paper sat on 10 May 2026, in the January 2026 term (Managerial Economics 06 May 26). It carries 2 marks.

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