The total utility of income curve for a risk-averse individual will be:
A)decreasing with income.
B)increasing with income at an increasing rate.
C)increasing with income at a constant rate.
D)increasing with income at a decreasing rate.

Question

Quizplus · Accepted Answer

A risk-averse individual is less willing to take risks and will derive less utility from each additional dollar earned. Therefore, the total utility of income curve will increase with income but at a decreasing rate, as each additional dollar earned provides less and less additional utility.

The Total Utility of Income Curve for a Risk-Averse Individual