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)a straight line
B)a convex curve
C)a concave curve
D)an 'S' curve

Question

Quizplus · Accepted Answer

A risk-neutral decision maker values outcomes solely based on their monetary value and is indifferent to risk. Therefore, their utility function will be linear, with a constant slope representing the marginal utility of money. Choosing option A, a straight line, is consistent with this view.

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