For a risk averse person, an increase in wealth brings ________ total utility of wealth and ________ marginal utility of wealth.
A) higher; higher
B) higher; lower
C) lower; higher
D) lower; lower

Question

Quizplus · Accepted Answer

An increase in wealth increases the total utility for a risk-averse person, but the marginal utility of wealth decreases as they derive less additional satisfaction from each additional unit of wealth.

For a Risk Averse Person, an Increase in Wealth Brings