Figure 14-2. The figure shows a utility function for Mary Ann.
-Refer to Figure 14-2. From the appearance of the utility function, we know that
A)Mary Ann is risk averse.
B)Mary Ann gains more satisfaction when her wealth increases by X dollars than she loses in satisfaction when her wealth decreases by X dollars.
C)the property of increasing marginal utility applies to Mary Ann.
D)All of the above are correct.

Question

Figure 14-2. The figure shows a utility function for Mary Ann. 
-Refer to Figure 14-2. From the appearance of the utility function, we know that
A)Mary Ann is risk averse. 
B)Mary Ann gains more satisfaction when her wealth increases by X dollars than she loses in satisfaction when her wealth decreases by X dollars. 
C)the property of increasing marginal utility applies to Mary Ann. 
D)All of the above are correct.

Quizplus · Accepted Answer

The utility function's appearance suggests that Mary Ann is risk averse, as risk-averse individuals typically have concave utility functions, indicating diminishing marginal utility of wealth.