Use the Information Below to Answer the Following Questions) -Which of the Following Is the Average Utility for the Are

question 46

Multiple Choice

Use the information below to answer the following questions) . Below are four options for an investment decision. $$\begin{array} { | l | l | l | l | } \hline \text { Decision/event } & \text { Rates Rise } & \text { Rates Stable } & \text { Rates Fall } \\\hline \text { Bank CD } & \mathbf { 0 . 8 0 } & 0.80 & 0.80 \\\hline \text { Bond fund } & - 0.75 & 0.86 & 1.50 \\\hline \text { Index fund } & 0.00 & 0.90 & 1.20 \\\hline \text { Growth fund } & - 0.30 & 0.70 & 1.40 \\\hline\end{array}$$
-Which of the following is the average utility for the bond fund decision?

• A) 1.18
• B) 0.38
• C) 0.54
• D) 0.43

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Definitions:

Binding Price Floor

A government-imposed price control or limit that sets a minimum price above the equilibrium price, leading to surplus in the market.

Price Paid

The actual amount of money exchanged for a good or service.

Supply and Demand

Fundamental economic model describing how prices and quantities of goods and services are determined in a market based on the relationship between the quantity supplied and the quantity demanded.

Price Floor

A government or regulatory minimum price set for a commodity, below which it cannot legally be sold.