Figure 14-2. The figure shows a utility function for Mary Ann.
-Refer to Figure 14-2. Suppose Mary Ann begins with $1,050 in wealth. Starting from there,
A)she would be willing to accept a coin-flip bet that would result in her winning $300 if the result was "heads" or losing $300 if the result was "tails."
B)the pain of losing $300 of her wealth would equal the pleasure of adding $300 to her wealth.
C)the pain of losing $300 of her wealth would exceed the pleasure of adding $300 to her wealth.
D)the pleasure of adding $300 to her wealth would exceed the pain of losing $300 of her wealth.

Question

Figure 14-2. The figure shows a utility function for Mary Ann. 
-Refer to Figure 14-2. Suppose Mary Ann begins with $1,050 in wealth. Starting from there,
A)she would be willing to accept a coin-flip bet that would result in her winning $300 if the result was "heads" or losing $300 if the result was "tails." 
B)the pain of losing $300 of her wealth would equal the pleasure of adding $300 to her wealth. 
C)the pain of losing $300 of her wealth would exceed the pleasure of adding $300 to her wealth. 
D)the pleasure of adding $300 to her wealth would exceed the pain of losing $300 of her wealth.

Quizplus · Accepted Answer

Mary Ann is likely risk-averse, meaning the pain of losing $300 would exceed the pleasure of gaining $300, as losses typically have a greater emotional impact than equivalent gains.