A person that is risk neutral will have indifference curves in a state space graph that are
A)linear
B)concave to the origin
C)L - shaped
D)convex to the origin

Question

Quizplus · Accepted Answer

Risk-neutral individuals are indifferent to risk, meaning they value all outcomes solely based on their expected values without weighting for risk. This results in linear indifference curves in a state space graph, as their utility increases at a constant rate with the increase in expected returns, showing no preference for more or less risky options as long as the expected value remains the same.

A Person That Is Risk Neutral Will Have Indifference Curves