Figure 19-2.The figure shows a utility function for Mary Ann.
-Refer to Figure 19-2.From the appearance of the utility function,we know that
A) Mary Ann is risk averse.
B) Mary Ann gains less satisfaction when her wealth increases by X dollars than she loses in satisfaction when her wealth decreases by X dollars.
C) the property of diminishing marginal utility applies to Mary Ann.
D) All of the above are correct.

Question

Figure 19-2.The figure shows a utility function for Mary Ann. 
-Refer to Figure 19-2.From the appearance of the utility function,we know that
A) Mary Ann is risk averse. 
B) Mary Ann gains less satisfaction when her wealth increases by X dollars than she loses in satisfaction when her wealth decreases by X dollars. 
C) the property of diminishing marginal utility applies to Mary Ann. 
D) All of the above are correct.

Quizplus · Accepted Answer

The utility function shows that Mary Ann is risk averse because the curve is concave (diminishing marginal utility applies), and she gains less satisfaction when her wealth increases by X dollars than she loses in satisfaction when her wealth decreases by X dollars. Therefore, all of the statements (A, B, and C) are correct.