Figure 9-2

question 50

Multiple Choice

Figure 9-2. The figure shows a utility function for Mary Ann.

-Refer to Figure 9-2. Suppose the vertical distance between the points (0, A) and (0, B) is 5. If her wealth increased from $1,050 to $1,350, then

• A) Mary Ann's subjective measure of her well-being would increase by less than 5 units.
• B) Mary Ann's subjective measure of her well-being would increase by more than 5 units.
• C) Mary Ann would change from being a risk-averse person into a person who is not risk averse.
• D) Mary Ann would change from being a person who is not risk averse into a risk-averse person.

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Definitions:

Amortization

The process of gradually writing off the initial cost of an asset over a period, often used for intangible assets.

Corridor

A method used in pension accounting to amortize certain actuarial gains and losses over time.

Unrecognized Loss

A loss that has occurred but has not yet been reported in the financial statements because it has not been realized through a transaction.

Amortization

A process of spreading out a loan's cost over its lifespan, reducing the value of an intangible asset or debt over a specified period.