Ans. Option b
Utility function, U = I^1.5
=> Marginal utility of income, MU = dU/dI = 1.5*I^0.5
And slope of MU, SMU = dMU/dI = 0.75/I^0.5
We can see that MU is an increasing function of income (I), but SMU shows that with increase in income MU increases at an increasing rate i.e. with each additional dollar of income, the utility rises making the utility function convex shaped. This is a characteristic of a risk loving individual as opposed to concave utility function of a risk averae individual.
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