A Decision Maker Whose Utility Function Graphs as a Straight

question 13

Multiple Choice

A decision maker whose utility function graphs as a straight line is

• A)conservative.
• B)a risk taker.
• C)risk neutral.
• D)a risk avoider.

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Definitions:

Pareto Optimal

A state of allocation of resources from which it is impossible to reallocate to make any one individual better off without making at least one individual worse off.

General Equilibrium

General equilibrium refers to a condition in an economy where supply and demand are in balance across all markets, taking into account the interrelations between these markets.

Inefficient

Refers to a situation where resources are not used in the most effective way, leading to wasted potential or output.

Edgeworth Box

Diagram showing all possible allocations of either two goods between two people or of two inputs between two production processes.