When Choosing the Right Amount of Life Insurance to Purchase

question 31

Multiple Choice

When choosing the right amount of life insurance to purchase, the consumer should first consider:

• A) how much money she can afford for monthly premiums
• B) her financial goals and reasons for buying it in the first place
• C) how many assets she already owns
• D) none of the above

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Definitions:

Indifference Curves

A graph showing different bundles of goods between which a consumer is indifferent.

Utility Levels

Measures of satisfaction or happiness that consumers derive from consuming goods and services.

Indifference Curve

A graph representing different bundles of goods between which a consumer is indifferent, showing preferences.

Marginal Utility

Marginal utility refers to the additional satisfaction or utility that a consumer gains from consuming one more unit of a good or service.