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# 1. For a utility function u(x) the measure of Absolute Risk Aversion is defined as Alca)...

## Question

###### 1. For a utility function u(x) the measure of Absolute Risk Aversion is defined as Alca)... 1. For a utility function u(x) the measure of Absolute Risk Aversion is defined as Alca) = uchun Consider the utility function u(x)=1-e-axi where a is some positive parameter. Show that this utility function is for risk-averse consumer (concave utility/negative second derivative). Show that this utility function exhibits Constant Absolute Risk Aversion. Find the value of this constant.

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