Figure 9-4. The figure shows a utility function for Dexter.

-Refer to Figure 9-4. In what way(s) does the graph differ from the usual case?
A) The utility function shown here is upward-sloping, whereas in the usual case the utility function is downward-sloping.
B) The utility function shown here is bowed downward (convex), whereas in the usual case the utility function is bowed upward (concave).
C) On the graph shown here, wealth is measured along the horizontal axis, whereas in the usual case saving is measured along the horizontal axis.
D) On the graph shown here, utility is measured along the vertical axis, whereas in the usual case satisfaction is measured along the vertical axis.

Question

Figure 9-4. The figure shows a utility function for Dexter.
 
-Refer to Figure 9-4. In what way(s) does the graph differ from the usual case?
A) The utility function shown here is upward-sloping, whereas in the usual case the utility function is downward-sloping. 
B) The utility function shown here is bowed downward (convex), whereas in the usual case the utility function is bowed upward (concave). 
C) On the graph shown here, wealth is measured along the horizontal axis, whereas in the usual case saving is measured along the horizontal axis. 
D) On the graph shown here, utility is measured along the vertical axis, whereas in the usual case satisfaction is measured along the vertical axis.

Quizplus · Accepted Answer

The graph shown here has a utility function that is bowed downward (convex), whereas in the usual case the utility function is bowed upward (concave). This is because Dexter experiences diminishing marginal utility as his wealth increases. As he acquires more wealth, the additional utility he derives from each additional unit of wealth decreases. Therefore, the marginal utility curve slopes downward and the utility function is bowed downward (convex).