Ask Question
21 June, 14:51

If a person is risk averse, then she has a. diminishing marginal utility of wealth, implying that her utility function gets flatter as wealth increases. b. diminishing marginal utility of wealth, implying that her utility function gets steeper as wealth increases. c. increasing marginal utility of wealth, implying that her utility function gets flatter as wealth increases. d. increasing marginal utility of wealth, implying that her utility function gets steeper as wealth increases.

+5
Answers (1)
  1. 21 June, 18:05
    0
    The answer is: A) diminishing marginal utility of wealth, implying that her utility function gets flatter as wealth increases.

    Explanation:

    If an investor is risk averse, he or she will earn a lower return rate than a non risk averse investor. As his or her wealth increases, the total utility of wealth increases but at a decreasing rate. This means that the utility function gets flatter as wealth increases for a risk averse investor.
Know the Answer?
Not Sure About the Answer?
Get an answer to your question ✅ “If a person is risk averse, then she has a. diminishing marginal utility of wealth, implying that her utility function gets flatter as ...” in 📙 Business if there is no answer or all answers are wrong, use a search bar and try to find the answer among similar questions.
Search for Other Answers