Figure 14-2

question 199

Multiple Choice

Figure 14-2. The figure shows a utility function for Mary Ann.
-Refer to Figure 14-2. From the appearance of the utility function, we know that

• A)if Mary Ann owns a house, she would not consider buying fire insurance.
• B)Mary Ann would prefer to hold a portfolio of stocks with an average return of 8 percent and a standard deviation of 2 percent to a portfolio of stocks with an average return of 8 percent and a standard deviation of 5 percent.
• C)Mary Ann would prefer to hold a portfolio of stocks with an average return of 8 percent and a standard deviation of 5 percent to a portfolio of stocks with an average return of 6 percent and a standard deviation of 3 percent.
• D)All of the above are correct.

---

Definitions:

Cognition

Gaining understanding and knowledge through the processes of thought, life experiences, and sensory engagement.

Conditioning

A method of altering behavior in which an individual learns to connect a previously neutral stimulus with a behavior they want to adopt.

Association

The process by which the mind links ideas, objects, or sensations together in the memory or imagination.

Sappers

Military engineers who perform a variety of tasks including laying or clearing minefields, demolishing buildings, and building bridges and roads, often under combat conditions.