Use Figure 15.2 to answer the following questions.
-According to the utility function in Figure 15.2 above,
A)people's lifetime utility is equal to .
B)people prefer to consume the average over their lifetime rather than and .
C)the utility associated with consuming the average over both periods is greater than the average of and .
D) .
E)b and c

Question

Use Figure 15.2 to answer the following questions. 
-According to the utility function in Figure 15.2 above,
A)people's lifetime utility is equal to . 
B)people prefer to consume the average over their lifetime rather than and . 
C)the utility associated with consuming the average over both periods is greater than the average of and . 
D) . 
E)b and c

Quizplus · Accepted Answer

From the utility function in Figure 15.2, we can see that the utility associated with consuming the average over both periods is greater than the utility of either period alone. Therefore, people prefer to consume the average over their lifetime rather than any one period alone (option B is incorrect). Additionally, the utility associated with consuming the average over both periods is greater than the average of the two periods when they are considered separately. Hence, option C is also correct. Therefore, the correct answer is E.