A Manager Who Sets U($20,0000)= 20,U($40,000)= 40,U($60,000)= 70 (Where "U

question 42

Multiple Choice

A manager who sets U($20,0000) = 20,U($40,000) = 40,U($60,000) = 70 (where "U( ) " stands for the utility at the particular outcome) has a utility function that:

• A)exhibits increasing marginal utility
• B)is convex.
• C)is linear.
• D)exhibits decreasing marginal utility.
• E)is concave.

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Definitions:

Annual Depreciation

The method of allocating the cost of a tangible asset over its useful life on a yearly basis.

Cost of Debt

The effective rate that a company pays on its total debt, reflecting the expense of borrowing funds.

Straight-Line Depreciation

A method of allocating an asset's cost evenly across its useful life.

After-Tax Annual Lease Payment

The amount of money paid every year for a lease after accounting for taxes.