Question 694 utility
Which of the below statements about utility is NOT generally accepted by economists? Most people are thought to:
(a) Prefer more to less, meaning that they will always like to have more wealth.
(b) Be risk averse, meaning that they dislike risk as measured by the standard deviation of wealth.
(c) Have a positively sloped utility function, so the gradient or first derivative of the utility function is always positive.
(d) Have a utility function that increases at a diminishing rate. So the shape is concave down like a frown, or the second derivative is always negative.
(e) Have a utility function that rises until it reaches the satiation point, then it falls because too much wealth causes problems.
Copyright © 2014 Keith Woodward