Figure 27-2.The figure shows a utility function for Britney.
-Refer to Figure 27-2.Suppose Britney 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 27-2.The figure shows a utility function for Britney. 
-Refer to Figure 27-2.Suppose Britney 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

From the graph, we can see that losing $300 would result in a decrease of utility greater than the increase in utility from gaining $300, indicating that the pain of losing $300 of her wealth exceeds the pleasure of adding $300 to her wealth. Therefore, Britney would not 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."