Someone who is risk neutral 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-preferring.

Question

Quizplus · Accepted Answer

A risk neutral individual has a constant marginal utility of wealth, meaning that every additional unit of wealth gives the same amount of satisfaction or utility regardless of the level of wealth already obtained. This is in contrast to someone who is risk-preferring, who may have increasing marginal utility of wealth, meaning that the utility gained from each additional unit of wealth increases as the level of wealth already obtained increases.

Someone Who Is Risk Neutral Has