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[5 marks] In economics, an index of risk aversion is dened as: _U(m) U'(m) ' Where m measures how much of a commodity is owned
[5 marks] In economics, an index of risk aversion is dened as: _U(m) U'(m) ' Where m measures how much of a commodity is owned and U (m) is a utility function. Find the index of aversion, I (m), for both utility functions Ua(m) : and Ub(m) : m5/8, and determine which indicates a greater aversion to risk. I(m) =
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