Someone who is risk-averse has
A)diminishing marginal utility of wealth.
B)constant marginal utility of wealth.
C)increasing marginal utility of wealth.
D)less marginal utility of wealth than someone who is risk-neutral.

Question

Quizplus · Accepted Answer

Risk-averse individuals have diminishing marginal utility of wealth, meaning they value each additional dollar of wealth less than the previous one. This is why they are willing to forgo potentially higher returns in order to avoid the risk of losing money.

Someone Who Is Risk-Averse Has