UTILITY U L!! 800 1,300 1.800 WEALTH (Dollars) Refer to Figure 28-3. Suppose the vertical distance between the points (0, A) and (o, B) is 12. If his wealth increased from $1,300 to $1,800, then OaDexter would be more likely to buy insurance. Ob Deders subjective measure of his well-being would increase by less than 12 units O Dexter would change from being a risk-averse person into a person who is not risk averse: Od Dexters subjective measure of his wes being would increase by more than 12 units

ENGR.ECONOMIC ANALYSIS
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Chapter1: Making Economics Decisions
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The following figure shows a utility function for Dexter
UTILITY
1,300 1.000
WEALTH (Dollars)
800
Refer to Figure 28-3. Suppose the vertical distance between the points (0, A) and (o, B) is 12. If his wealth increased from $1,300 to $1,800, then
OaDexter would be more likely to buy insurance.
Ob Dexters subjective measure of his well-being would increase by less than 12 units
Dexter would change from being a misk-averse person into a person who is not risk averse
Od Dexters subjective measure of his well being would increase by more than 12 units
Transcribed Image Text:The following figure shows a utility function for Dexter UTILITY 1,300 1.000 WEALTH (Dollars) 800 Refer to Figure 28-3. Suppose the vertical distance between the points (0, A) and (o, B) is 12. If his wealth increased from $1,300 to $1,800, then OaDexter would be more likely to buy insurance. Ob Dexters subjective measure of his well-being would increase by less than 12 units Dexter would change from being a misk-averse person into a person who is not risk averse Od Dexters subjective measure of his well being would increase by more than 12 units
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