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) increasing marginal utility
D) consumption smoothing
E) diminishing marginal utility

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) increasing marginal utility 
D) consumption smoothing 
E) diminishing marginal utility

Quizplus · Accepted Answer

Curve b in the figure exhibits diminishing marginal utility, which means as consumption increases, the additional utility derived from each additional unit of consumption decreases.

Refer to the Following Figure When Answering