Suppose That Thom Experiences a Greater Loss in Utility If

question 54

Multiple Choice

Suppose that Thom experiences a greater loss in utility if he loses $50 than he would gain in utility if he wins $50. This implies that Thom's

• A)marginal utility diminishes as wealth rises, so he must be risk averse.
• B)marginal utility diminishes as wealth rises, but we can't tell from this if he is risk averse.
• C)marginal utility increases as wealth rises, so he must be risk averse.
• D)marginal utility increases as wealth rises, but we can't tell from this if he is risk averse.

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Definitions:

Rent Seeking

The activity of individuals or entities that seek to gain wealth through the manipulation of public policy or government allocation rather than through trade and the production of added value.

Lobbying Fees

Payments made to professional lobbyists for their services in influencing legislative or regulatory actions.

Propaganda

Information, often biased or misleading, used to promote a political cause or point of view.

Structural Unemployment

A type of unemployment resulting from industrial reorganization, typically due to technological change, rather than fluctuations in supply or demand.