David's Utility Function If David's Current Wealth Is $61,000,then

question 49

Multiple Choice

David's Utility Function

If David's current wealth is $61,000,then

• A)his gain in utility from gaining $1,000 is less than his loss in utility from losing $1,000.David is risk averse.
• B)his gain in utility from gaining $1,000 is less than his loss in utility from losing $1,000.David is not risk averse.
• C)his gain in utility from gaining $1,000 is greater than his loss in utility from losing $1,000.David is risk averse.
• D)his gain in utility from gaining $1,000 is greater than his loss in utility from losing $1,000.David is not risk averse.

---

Definitions:

Consumer Surplus

The difference between the total amount consumers are willing to pay for a good or service and the total amount they actually pay; a measure of consumer benefit.

Producer Surplus

The difference between the amount a producer is actually paid for a good compared to the minimum amount they would accept for the good.

Excess Supply

A market condition where the quantity of a commodity available for sale exceeds the quantity demanded at the current price.

Producer Surplus

The difference between what producers are willing to accept for a good or service and what they actually receive, representing their gain.