3.7 Suppose that A> B> C> D and that the utilities of these alternatives satisfy U(A) +U (D)=U (B) + U(C). Is it true that U (B+C) is greater than U (A + D) because theformer has a smaller variance? Why or why not?

The given condition states that the utility of consuming goods A and D together is equal to the…

Answered: Suppose that A> B> C> D and that the…

Suppose that A> B> C> D and that the utilities of these alt )=U(B) + U(C). Is it true that U (B+C) is greater than U (A + D) because the emoller variance? Why or why not?

ENGR.ECONOMIC ANALYSIS

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Chapter1: Making Economics Decisions

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Question

3.7 Suppose that A> B> C> D and that the utilities of these alternatives satisfy U(A) +
U (D)=U (B) + U(C). Is it true that U (B+C) is greater than U (A + D) because the
former has a smaller variance? Why or why not?

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