Question :
11.RefertoFigure27-1.Whichdistancealongtheverticalaxisrepresentsthemarginalutilityofanincreaseinwealthfrom$600to$800?
a.thedistancebetweentheoriginandpointB
b.thedistancebetweentheoriginan : 1261858
11.RefertoFigure27-1.Whichdistancealongtheverticalaxisrepresentsthemarginalutilityofanincreaseinwealthfrom$600to$800?
a.thedistancebetweentheoriginandpointB
b.thedistancebetweentheoriginandpointC
c.thedistancebetweenpointAandpointC
d.thedistancebetweenpointBandpointC
12.RefertoFigure27-1.Let0ArepresentthedistancebetweentheoriginandpointA;letABrepresentthedistancebetweenpointAandpointB;etc.Whichofthefollowingratiosbestrepresentsthemarginalutilityperdollarwhenwealthincreasesfrom$400to$600?
a.
b.
c.
d.
13.RefertoFigure27-1.Forthepersontowhomthisutilityfunctionapplies,
a.themorewealthshehas,thelessutilityshegetsfromanadditionaldollarofwealth.
b.themorewealthshehas,themoreutilityshegetsfromanadditionaldollarofwealth.
c.herlevelofsatisfactionwillbeenhancedmorebyanincreaseinwealthfrom$600to$800thanitwouldbebyanincreaseinwealthfrom$400to$600.
d.herlevelofsatisfactionwillbeenhancedequallybyanincreaseinwealthfrom$600to$800orbyanincreaseinwealthfrom$400to$600.
14.RefertoFigure27-1.Supposethepersontowhomthisutilityfunctionappliesbeginswith$600inwealth.Startingfromthere,
a.shewouldbewillingtoacceptacoinflipbetthatwouldresultinherwinning$200iftheresultwas“heads”orlosing$200iftheresultwas“tails.”
b.thepainoflosing$200ofherwealthwouldequalthepleasureofadding$200toherwealth.
c.thepainoflosing$200ofherwealthwouldexceedthepleasureofadding$200toherwealth.
d.thepleasureofadding$200toherwealthwouldexceedthepainoflosing$200ofherwealth.
15.RefertoFigure27-1.Thepropertiesexhibitedbythisutilityfunctionhelptoexplainvariousthingsweobserveintheeconomy,including
a.therisk-returntradeoff.
b.insurance.
c.diversification.
d.Alloftheabovearecorrect.
Figure27-2.ThefigureshowsautilityfunctionforBritney.
16.RefertoFigure27-2.Fromtheappearanceoftheutilityfunction,weknowthat
a.Britneyisriskaverse.
b.BritneygainslesssatisfactionwhenherwealthincreasesbyXdollarsthanshelosesinsatisfactionwhenherwealthdecreasesbyXdollars.
c.thepropertyofdiminishingmarginalutilityappliestoBritney.
d.Alloftheabovearecorrect.
17.RefertoFigure27-2.Fromtheappearanceoftheutilityfunction,weknowthat
a.Britneyisriskaverse.
b.BritneygainsmoresatisfactionwhenherwealthincreasesbyXdollarsthanshelosesinsatisfactionwhenherwealthdecreasesbyXdollars.
c.thepropertyofincreasingmarginalutilityappliestoBritney.
d.Alloftheabovearecorrect.
18.RefertoFigure27-2.Supposetheverticaldistancebetweenthepoints(0,A)and(0,B)is5.Ifherwealthincreasedfrom$1,050to$1,350,then
a.Britney’ssubjectivemeasureofherwellbeingwouldincreasebylessthan5units.
b.Britney’ssubjectivemeasureofherwellbeingwouldincreasebymorethan5units.
c.Britneywouldchangefrombeingarisk-aversepersonintoapersonwhoisnotriskaverse.
d.Britneywouldchangefrombeingapersonwhoisnotriskaverseintoarisk-averseperson.
a.ifBritneyownsahouse,shewouldnotconsiderbuyingfireinsurance.
b.Britneywouldprefertoholdaportfolioofstockswithanaveragereturnof8percentandastandarddeviationof2percenttoaportfolioofstockswithanaveragereturnof8percentandastandarddeviationof5percent.
c.Britneywouldprefertoholdaportfolioofstockswithanaveragereturnof8percentandastandarddeviationof5percenttoaportfolioofstockswithanaveragereturnof6percentandastandarddeviationof3percent.
d.Alloftheabovearecorrect.
20.RefertoFigure27-2.SupposeBritneybeginswith$1,050inwealth.Startingfromthere,
a.shewouldbewillingtoacceptacoinflipbetthatwouldresultinherwinning$300iftheresultwas“heads”orlosing$300iftheresultwas“tails.”
b.thepainoflosing$300ofherwealthwouldequalthepleasureofadding$300toherwealth.
c.thepainoflosing$300ofherwealthwouldexceedthepleasureofadding$300toherwealth.
d.thepleasureofadding$300toherwealthwouldexceedthepainoflosing$300ofherwealth.