If a family's utility function has the shape typical of most families' utility functions, the marginal utility of income is:

Question

Quizplus · Accepted Answer

Most families' utility functions exhibit a diminishing marginal utility of income, meaning that the additional satisfaction gained from each additional unit of income decreases as income increases. This is because as income increases, individuals are able to satisfy their basic needs and wants and are more likely to spend additional income on items that provide less satisfaction or are considered luxury goods.

If a Family's Utility Function Has the Shape Typical of Most