Diminishing marginal utility causes an investor to refuse to accept a fair bet because
A) the investor finds greater and greater satisfaction from each additional dollar earned.
B) the investors have a greater opportunity cost than most other investors.
C) the satisfaction of gaining a dollar is less than the dissatisfaction of losing a dollar.
D) the dissatisfaction of losing a dollar is less than the satisfaction of gaining a dollar.

Question

Quizplus · Accepted Answer

Diminishing marginal utility means that as a person gains more of something, the additional satisfaction they get from each additional unit decreases. Therefore, the satisfaction of gaining a dollar becomes less and less as the investor already has a lot of money. On the other hand, losing a dollar has more of an impact as it reduces the total wealth. This creates a situation where the dissatisfaction of losing a dollar is greater than the satisfaction of gaining one, causing the investor to refuse the bet.

Diminishing Marginal Utility Causes an Investor to Refuse to Accept