Figure 14-1

question 14

Multiple Choice

Figure 14-1. The figure shows a utility function.
-Refer to Figure 14-1. For the person to whom this utility function applies,

• A)the more wealth she has, the less utility she gets from an additional dollar of wealth.
• B)the more wealth she has, the more utility she gets from an additional dollar of wealth.
• C)her level of satisfaction will be enhanced more by an increase in wealth from $600 to $800 than it would be by an increase in wealth from $400 to $600.
• D)her level of satisfaction will be enhanced equally by an increase in wealth from $600 to $800 or by an increase in wealth from $400 to $600.

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Definitions:

Real Wages

Wages adjusted for inflation, reflecting the purchasing power of income and the real value of earnings over time.

Price Level

A gauge of the mean prices for goods and services in an economy during a certain period.

Unemployment Rate

The unemployment rate is a measure expressed as a percentage, showing the portion of the labor force that is jobless and actively seeking employment, reflecting the health of an economy's labor market.

Natural Rate

An economic concept referring to the level of any specific economic variable that is achieved in the long run and is unimpacted by short-term fluctuations.