Figure 19-4.The figure shows a utility function for Dexter.
-Refer to Figure 19-4.Suppose Dexter begins with $1,300 in wealth.Starting from there,
A) the pain of losing $500 of his wealth would equal the pleasure of adding $500 to his wealth.
B) the pain of losing $500 of his wealth would exceed the pleasure of adding $500 to his wealth.
C) the pleasure of adding $500 to his wealth would exceed the pain of losing $500 of his wealth.
D) This cannot be determined from the graph.

Question

Figure 19-4.The figure shows a utility function for Dexter. 
-Refer to Figure 19-4.Suppose Dexter begins with $1,300 in wealth.Starting from there,
A) the pain of losing $500 of his wealth would equal the pleasure of adding $500 to his wealth. 
B) the pain of losing $500 of his wealth would exceed the pleasure of adding $500 to his wealth. 
C) the pleasure of adding $500 to his wealth would exceed the pain of losing $500 of his wealth. 
D) This cannot be determined from the graph.

Quizplus · Accepted Answer

According to the graph, Dexter's utility would increase more if his wealth increased from $1,300 to $1,800 than if it decreased from $1,300 to $800. This indicates that adding $500 to his wealth would give him more pleasure than losing $500 of his wealth would cause him pain. Therefore, the pleasure of adding $500 to his wealth would exceed the pain of losing $500 of his wealth, making choice C the correct answer.