Figure 27-5

question 11

Multiple Choice

Figure 27-5.The figure shows a utility function for Dexter.
-Refer to Figure 27-5.From the appearance of the utility function,we know that

• A)Dexter is risk averse.
• B)Dexter gains more satisfaction when his wealth increases by X dollars than he loses in satisfaction when his wealth decreases by X dollars.
• C)the property of decreasing marginal utility applies to Dexter.
• D)All of the above are correct.

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Definitions:

Standard Deviation

An indicator of the degree of unevenness or spread among values in a statistical set.

Mean

The average value of a set of numbers, calculated by dividing the sum of all the values by the number of values.

Least Squares

Least squares is a mathematical method used to find the best-fitting line or curve to a set of points by minimizing the sum of the squares of the differences between the observed and estimated values.

Squared Vertical Distances

The square of the vertical distance from each data point to a line (often in the context of regression analysis), used to measure deviation or error.