A team of researchers has conducted a study of the well being of the citizens of the island nation of Zarasa.
Using a scale from 1 (least happy) to 10 (most happy), the researchers find that citizens who earn 100 Zarutas per year have a mean happiness of 2.0, those who earn 200 Zarutas per year have a mean happiness of 6.0, and those who earn 300 Zarutas per year have a mean happiness of 7.0. The researchers should make which of the following conclusions? A) The utility of Zarasians increases with income.
B) The marginal utility of Zarasians increases with income.
C) The marginal utility of Zarasians decreases with income.
D) both A and B
E) both A and C
Question 2
The individual pictured in Figure 5.3
A) must be risk-averse.
B) must be risk-neutral.
C) must be risk-loving.
D) could be risk-averse, risk-neutral, or risk-loving.
E) could be risk-averse or risk-loving, but not risk-neutral.
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