The Slope of the Utility Curves for a Strongly Risk-Averse

question 49

Multiple Choice

The slope of the utility curves for a strongly risk-averse investor, relative to the slope of the utility curves for a less risk-averse investor, will

• A) be steeper.
• B) be flatter.
• C) be vertical.
• D) be horizontal.
• E) not change.

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Definitions:

Level of Satisfaction

The degree to which needs, desires, or expectations are fulfilled or gratified.

Marginal Utility

The change in satisfaction or utility received by consuming one additional unit of a good or service.

Limited Usefulness

Refers to the notion that a tool, resource, or piece of information is only beneficial or applicable in certain situations or to a certain extent.

Optimal Quantity

The amount of a good or service that maximizes the net benefit to an individual or society, often considering factors like cost and utility.