Question

which describes risk aversion?

• weighing the extra costs and benefits of one more unit
• the personal satisfaction gained from consumption
• reluctance for taking chances when making investments
• buying goods according to what one wants or needs

Explanation:

• The first option describes marginal analysis.
• The second option defines utility.
• The third option matches the definition of risk aversion, which refers to the preference for lower-risk options over higher-risk ones, especially in financial decisions.
• The fourth option describes consumer choice based on wants/needs.

Answer:

reluctance for taking chances when making investments