(Table: Total Utility of Income after University Expenses and Scenario: University Expenses) Use Table: Total Utility of Income After University Expenses and Scenario: University Expenses. The Perez family experiences _____ marginal utility as income increases. The marginal utility of income between $32,500 and $35,000 is _____ utils per dollar, while it is _____ utils per dollar between $45,000 and $47,500.
Scenario: University Expenses
The Perez family would like to send their eldest daughter, Luciana, to university in the fall semester. There is a 25% chance that Luciana will earn a full scholarship to the Miller School of Medicine at the University of Miami, leaving the Perez family with $50,000 in income after tuition; a 50% chance that Luciana will earn a partial scholarship to the Florida State University College of Medicine and that the Perez family will have $40,000 in income after tuition; and a 25% chance that she will attend the Florida Institute of Technology, a private college, and that the Perez family will consequently have $30,000 in income after tuition.
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Table: Total Utility of Income after University Expenses
A) increasing; 0.48; 0.64
B) increasing; 0.12; 0.36
C) diminishing; 0.28; 0.08
D) diminishing; 0.40; 0.10
Correct Answer:
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