A risk-averse person has
A)utility and marginal utility curves that slope upward.
B)utility and marginal utility curves that slope downward.
C)a utility curve that slopes down and a marginal utility curve that slopes upward.
D)a utility curve that slopes upward and a marginal utility curve that slopes downward.

Question

Quizplus · Accepted Answer

A risk-averse person is someone who prefers a certain outcome over a risky one with potentially higher payoffs. This means that they would likely experience decreasing marginal utility as they gain more wealth, leading to a marginal utility curve that slopes downward. However, because they also prefer more certain outcomes, they would experience increasing utility as they gain more wealth overall, leading to a utility curve that slopes upward. Therefore, the choice that fits this description is D: a utility curve that slopes upward and a marginal utility curve that slopes downward.

A Risk-Averse Person Has