An individual with a constant marginal utility of income will be:
A) risk averse.
B) risk neutral.
C) risk loving.
D) insufficient information for a decision

Question

Quizplus · Accepted Answer

If an individual has a constant marginal utility of income, it means that each additional unit of income will provide the same amount of satisfaction or utility. As a result, the individual is unlikely to be strongly motivated by gains or losses in income and will therefore be risk-neutral.

An Individual with a Constant Marginal Utility of Income Will