An individual's preference is characterized by the diminishing marginal utility function.Identify the risk attitude of this individual.
A)Risk seeking
B)Risk averse
C)Risk loving
D)Risk neutral
E)Risk biased

Question

Quizplus · Accepted Answer

An individual characterized by a diminishing marginal utility function is typically risk averse. This is because as the individual gains more of a good, the additional satisfaction (utility) gained from consuming an extra unit of the good decreases, leading them to prefer certain outcomes over uncertain ones with the same expected value.

An Individual's Preference Is Characterized by the Diminishing Marginal Utility