Figure 9-1. the Figure Shows a Utility Function

question 387

Multiple Choice

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

-Refer to Figure 9-1. The properties exhibited by this utility function help to explain various things we observe in the economy, including

• A) the risk-return tradeoff.
• B) insurance.
• C) diversification.
• D) All of the above are correct.

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Definitions:

Social Construction

An idea that is built on shared perceptions, not on objective reality.

Exosystem

Refers to the layer of a person's environment that indirectly affects them, part of Bronfenbrenner's ecological systems theory.

Socioeconomic Status

A valuation of one's economic and social rank within society, which considers variables such as income, academic background, and employment type.