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

-Refer to Figure 9-4. From the appearance of the graph, we know that
A) Dexter's level of satisfaction increases by more when his wealth increases from $1,001 to $1,002 than it does when his wealth increases from $1,000 to $1,001.
B) Dexter's level of satisfaction increases by less when his wealth increases from $1,001 to $1,002 than it does when his wealth increases from $1,000 to $1,001.
C) Dexter's level of satisfaction increases by the same amount when his wealth increases from $1,001 to $1,002 as it does when his wealth increases from $1,000 to $1,001.
D) None of the above answers can be inferred from the appearance of the utility function.

Question

Figure 9-4. The figure shows a utility function for Dexter.
 
-Refer to Figure 9-4. From the appearance of the graph, we know that
A) Dexter's level of satisfaction increases by more when his wealth increases from $1,001 to $1,002 than it does when his wealth increases from $1,000 to $1,001. 
B) Dexter's level of satisfaction increases by less when his wealth increases from $1,001 to $1,002 than it does when his wealth increases from $1,000 to $1,001. 
C) Dexter's level of satisfaction increases by the same amount when his wealth increases from $1,001 to $1,002 as it does when his wealth increases from $1,000 to $1,001. 
D) None of the above answers can be inferred from the appearance of the utility function.

Quizplus · Accepted Answer

The graph shows that the slope of the utility function is decreasing, which means that Dexter's level of satisfaction increases by less as his wealth increases. Therefore, the correct answer is A.