Figure 9-2. The figure shows a utility function for Mary Ann.

-Refer to Figure 9-2. From the appearance of the utility function, we know that
A) Mary Ann is risk averse.
B) Mary Ann gains more satisfaction when her wealth increases by X dollars than she loses in satisfaction when her wealth decreases by X dollars.
C) the property of increasing marginal utility applies to Mary Ann.
D) All of the above are correct.

Question

Figure 9-2. The figure shows a utility function for Mary Ann.
 
-Refer to Figure 9-2. From the appearance of the utility function, we know that
A) Mary Ann is risk averse. 
B) Mary Ann gains more satisfaction when her wealth increases by X dollars than she loses in satisfaction when her wealth decreases by X dollars. 
C) the property of increasing marginal utility applies to Mary Ann. 
D) All of the above are correct.

Quizplus · Accepted Answer

A risk-averse individual has a concave utility function, which is typically depicted in Figure 9-2. This indicates that Mary Ann prefers certain outcomes over uncertain ones with the same expected value.