If a person is risk averse,then she has
A)diminishing marginal utility of wealth,implying that her utility function gets flatter as wealth increases.
B)diminishing marginal utility of wealth,implying that her utility function gets steeper as wealth increases.
C)increasing marginal utility of wealth,implying that her utility function gets flatter as wealth increases.
D)increasing marginal utility of wealth,implying that her utility function gets steeper as wealth increases.

Question

Quizplus · Accepted Answer

A risk-averse individual has a diminishing marginal utility of wealth, meaning that the more wealth they have, the less additional utility they receive from each additional unit of wealth. As a result, their utility function gets flatter as wealth increases, and they are more willing to take actions that minimize their risk and preserve their current level of wealth.

If a Person Is Risk Averse,then She Has