Figure 144

Example of a Money/Utility Relation

A risk seeker's marginal utility of money increases. A risk-indifferent individual has a constant marginal utility of money. A risk averter displays a diminishing marginal utility of money.

Total utility

Increasing marginal utility of money: risk seeker

C Constant marginal utility of money:

indifferent to risk

Diminishing marginal utility of money: risk averter


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