Figure 19-2.The figure shows a utility function for Mary Ann.
-Refer to Figure 19-2.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 19-2.The figure shows a utility function for Mary Ann. 
-Refer to Figure 19-2.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's utility function likely exhibits diminishing marginal utility of wealth, meaning the pain of losing $300 would exceed the pleasure of gaining $300.