7. Bao's utility function for income exhibits diminishing marginal utility of income. From this information, we know tha
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7. Bao's utility function for income exhibits diminishing marginal utility of income. From this information, we know that Bao: a) is risk loving. b) is risk averse. c) is risk neutral. d) will pay a risk premium to avoid any gamble. e) will never accept any gamble. 8. Suppose a firm's short-run production function is q=10L, where K=10 is the fixed level of capital and L represents variable amounts of labor. Which of the following statements correctly characterizes this firm's short-run production process? a) Marginal product of labor (MPL) increases and then decreases. b) MPL always increases. c) MPL is constant. d) The firm faces diminishing MPL. e) All of the above are correct characterizations. 10