Figure 19-4

question 92

Multiple Choice

Figure 19-4.The figure shows a utility function for Dexter.
-Refer to Figure 19-4.From the appearance of the utility function,we know that

• A) Dexter is risk averse.
• B) Dexter gains less satisfaction when his wealth increases by X dollars than he loses in satisfaction when his wealth decreases by X dollars.
• C) the property of diminishing marginal utility does not apply to Dexter.
• D) All of the above are correct.

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Definitions:

Sunk Cost

Costs that have already been incurred and cannot be recovered or changed.

Make or Buy

A decision-making process in which a company chooses between manufacturing a product internally or purchasing it from an external supplier.

Significant Sunk Costs

Expenses that have already been incurred and cannot be recovered or changed.

Avoidable Cost

Costs that can be eliminated if a certain decision is made, not incurred if a particular activity is avoided.