For an individual having a utility function characterized by a(n) ____, the maximization of expected monetary value criterion will, in general, yield the same decisions as the maximization of expected utility criterion.
A) diminishing marginal utility for money
B) linear utility for money
C) increasing marginal utility for money
D) inverse marginal utility for money
E) converse marginal utility for money

Question

Quizplus · Accepted Answer

A linear utility function for money implies that the individual values each additional unit of money equally, regardless of how much money they already have. This characteristic aligns with the maximization of expected monetary value, as both criteria would lead to the same decisions under a linear utility function. Other types of utility functions, such as those with diminishing, increasing, inverse, or converse marginal utility, imply that the value of each additional unit of money changes depending on the amount of money already obtained, which would generally lead to different decisions than those based solely on expected monetary value.

For an Individual Having a Utility Function Characterized by A(n)