Figure 9-4

question 373

Multiple Choice

Figure 9-4. The figure shows a utility function for Dexter.

-Refer to Figure 9-4. Suppose the vertical distance between the points (0, A) and (0, B) is 12. If his wealth increased from $1,300 to $1,800, then

• A) Dexter's subjective measure of his well-being would increase by less than 12 units.
• B) Dexter's subjective measure of his well-being would increase by more than 12 units.
• C) Dexter would change from being a risk-averse person into a person who is not risk averse.
• D) Dexter would forgo the insurance he bought when his wealth was $1,300.

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Definitions:

Periodic LIFO

An inventory valuation method where the last items placed in inventory are the first ones counted as sold, calculated at the end of an accounting period.

Cost of Goods Sold

Represents the direct costs attributable to the production of the goods sold by a company.

Ending Inventory

Ending inventory is the total value of all products, raw materials, and finished goods that are not sold at the end of an accounting period.

LIFO Perpetual

An inventory valuation method where the last items added to inventory are assumed to be the first sold, updated continuously throughout the accounting period.