Figure 27-1.The figure shows a utility function.
-Refer to Figure 27-1.For the person to whom this utility function applies,
A)the more wealth she has,the less utility she gets from an additional dollar of wealth.
B)the more wealth she has,the more utility she gets from an additional dollar of wealth.
C)her level of satisfaction will be enhanced more by an increase in wealth from $600 to $800 than it would be by an increase in wealth from $400 to $600.
D)her level of satisfaction will be enhanced equally by an increase in wealth from $600 to $800 or by an increase in wealth from $400 to $600.

Question

Figure 27-1.The figure shows a utility function. 
-Refer to Figure 27-1.For the person to whom this utility function applies,
A)the more wealth she has,the less utility she gets from an additional dollar of wealth. 
B)the more wealth she has,the more utility she gets from an additional dollar of wealth. 
C)her level of satisfaction will be enhanced more by an increase in wealth from $600 to $800 than it would be by an increase in wealth from $400 to $600. 
D)her level of satisfaction will be enhanced equally by an increase in wealth from $600 to $800 or by an increase in wealth from $400 to $600.

Quizplus · Accepted Answer

This utility function exhibits diminishing marginal utility of wealth, meaning that as the person's wealth increases, the additional utility gained from an extra dollar of wealth decreases. Therefore, the more wealth she has, the less utility she gets from an additional dollar of wealth. Choices B, C, and D are not supported by the information provided in the figure.

Figure 27-1.The Figure Shows a Utility Function