Figure 9-1. the Figure Shows a Utility Function

question 411

Multiple Choice

Figure 9-1. The figure shows a utility function.

-Refer to Figure 9-1. For the person to whom this utility function applies,

• A) the more wealth she has, the less utility she gets from an additional dollar of wealth.
• B) the more wealth she has, the more utility she gets from an additional dollar of wealth.
• C) her level of satisfaction will be enhanced more by an increase in wealth from $600 to $800 than it would be by an increase in wealth from $400 to $600.
• D) her level of satisfaction will be enhanced equally by an increase in wealth from $600 to $800 or by an increase in wealth from $400 to $600.

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Definitions:

Cost of Merchandise Sold

The total cost incurred to purchase or produce the goods sold by a company during a specific period.

Gross Profit

The financial metric representing the difference between revenue and the cost of goods sold, indicating how efficiently a company is producing its goods.

Cost Flow Assumption

A method of accounting designated to assess inventory worth and calculate the cost of goods sold, which can be either FIFO (First-In, First-Out) or LIFO (Last-In, First-Out).

Physical Flow of Goods

Refers to the actual movement of goods through the production process to the customer, distinct from the accounting or paper flow.