Refer to the following figure when answering
Figure 16.1: Consumption Function
-Consider the utility functions in Figure 16.1 above. Curve b exhibits:
A) risk-taking behavior
B) constant marginal utility
C) diminishing marginal utility
D) consumption smoothing
E) None of these answers are correct.

Question

Refer to the following figure when answering  
Figure 16.1: Consumption Function 
-Consider the utility functions in Figure 16.1 above. Curve b exhibits:
A) risk-taking behavior 
B) constant marginal utility 
C) diminishing marginal utility 
D) consumption smoothing 
E) None of these answers are correct.

Quizplus · Accepted Answer

Curve b exhibits diminishing marginal utility, as the slope of the curve becomes flatter as consumption increases. This indicates that the additional utility gained by consuming each additional unit of a good decreases as the overall level of consumption increases.

Refer to the Following Figure When Answering