Risk aversion can best be explained by:
A) A person's level of income.
B) Increasing marginal utility of money.
C) The size of the bet.
D) Diminishing marginal utility of money.
E) Constant marginal utility of money.

Question

Quizplus · Accepted Answer

Risk aversion is best explained by the concept of diminishing marginal utility of money, which suggests that as a person acquires more money, the additional satisfaction or utility gained from an extra dollar decreases. This makes individuals less willing to risk losing money they already have for potential gains.

Risk Aversion Can Best Be Explained By