Suppose that an individual is risk-averse.If this individual's utility function is depicted in a graph,with income measured on the horizontal axis and utils on the vertical axis,the graph will be an upward-sloping:
A)straight line through the origin.
B)straight line with a positive vertical intercept.
C)curve with a steadily increasing slope (i.e. ,a curve that is convex from below).
D)curve with a steadily decreasing slope (i.e. ,a curve that is concave from below).

Question

Quizplus · Accepted Answer

A risk-averse individual's utility function will have a steadily decreasing slope, meaning that the marginal utility of income decreases with each additional unit of income. This reflects the fact that as income increases, each additional unit of income becomes less and less valuable to the individual. Thus, the graph will be concave from below.

Suppose That an Individual Is Risk-Averse