An individual finds that as his income increases, his total utility also increases but at a decreasing rate. This can be attributed to:
A) diminishing marginal utility.
B) being risk-neutral.
C) expected values.
D) efficient allocation of risk.

Question

Quizplus · Accepted Answer

As income increases, the additional satisfaction (marginal utility) gained from each additional unit of income decreases, which is the principle of diminishing marginal utility.

An Individual Finds That as His Income Increases, His Total