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You have a choice between the following three options Option 1:A guaranteed $500 Option 2:50% chance of $200 plus 50% chance of $600 Option 3:A

You have a choice between the following three options

  • Option 1:A guaranteed $500
  • Option 2:50% chance of $200 plus 50% chance of $600
  • Option 3:A guaranteed $300 and a 50% chance of receiving another $500

You choose option 3.

Are you risk-averse, risk-neutral, or a risk-taker?Explain using relevant economic concepts

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