If an individual is risk-averse,then his or her total utility function must display _____ marginal utility.
A)constant
B)diminishing
C)increasing
D)either constant or diminishing,but not increasing,

Question

Quizplus · Accepted Answer

Risk-averse individuals prefer certainty over uncertainty, which means they are less willing to take risks. Diminishing marginal utility states that the more of a good or service a person consumes, the less additional satisfaction they will receive from each additional unit consumed. As a result, the total utility function of a risk-averse individual must display diminishing marginal utility, as they will consistently prefer less of a good or service in exchange for more certainty.

If an Individual Is Risk-Averse,then His or Her Total Utility