When the utility function for a risk-neutral decision maker is graphed (with monetary value on the horizontal axis and utility on the vertical axis),the function appears as a(n)
A)convex curve.
B)concave curve.
C)'S' curve.
D)straight line.

Question

Quizplus · Accepted Answer

Utility functions for risk-neutral decision makers are usually linear because they do not exhibit risk aversion or risk-seeking behavior. This means that the decision maker assigns a constant marginal utility to each additional unit of money, and their utility function is a straight line with a positive slope. Therefore, D) straight line is the correct answer.

When the Utility Function for a Risk-Neutral Decision Maker Is