On a graph with utility on the vertical axis and wealth on the horizontal axis, diminishing marginal utility of wealth implies that the utility function is
A)upward-sloping and has decreasing slope.
B)upward-sloping and has increasing slope.
C)downward-sloping and has decreasing slope.
D)downward-sloping and has increasing slope.

Question

Quizplus · Accepted Answer

Diminishing marginal utility of wealth means that as wealth increases, the additional utility gained from each additional unit of wealth decreases. This is represented graphically by an upward-sloping curve (indicating that utility increases with wealth) that has a decreasing slope (indicating that the rate of increase in utility slows down as wealth increases).

On a Graph with Utility on the Vertical Axis and Wealth