Figure 27-1
The following figure shows a utility function for Ren.
-Refer to Figure 27-1. From the appearance of the utility function, we know that
A)Ren enjoys engaging in risky behavior.
B)Ren gains more satisfaction when his wealth increases by X dollars than he loses in satisfaction when his wealth decreases by X dollars.
C)the property of diminishing marginal utility does not apply to Ren.
D)Ren is risk averse.

Question

Figure 27-1
The following figure shows a utility function for Ren. 
-Refer to Figure 27-1. From the appearance of the utility function, we know that
A)Ren enjoys engaging in risky behavior. 
B)Ren gains more satisfaction when his wealth increases by X dollars than he loses in satisfaction when his wealth decreases by X dollars. 
C)the property of diminishing marginal utility does not apply to Ren. 
D)Ren is risk averse.

Quizplus · Accepted Answer

The utility function likely shows diminishing marginal utility, indicating that Ren gains less additional satisfaction from each additional dollar, which is characteristic of risk aversion.

Figure 27-1 The Following Figure Shows a Utility Function for Ren