Unit 2 - Final Quiz

A utility function that describes how much of one market basket is preferred to another is called

• an ordinal utility function.

• a cardinal utility function.

• .a utility-maximizing function.

• a definitive utility function.

Indifference curves cannot intersect because of the assumption that

• indifference curves are negatively sloped.

• marginal utility diminishes as more of that good is consumed.

• preferences are transitive (multiple options)

• preferences are complete.

If Karim's marginal rate of substitution of Ice Cream for Custard Dessert is 2, then we know that

• he is willing to give up 2 units of Custard Dessert to get the next unit of Ice Cream.

• he is willing to give up 2 units of Ice Cream to get the next unit of Custard Dessert.

• 2 units of Custard Dessert are identical to 2 units of Ice Cream.

• he prefers to eat 2 units of Custard Dessert together with every unit of Ice Cream he eats.

Ordinal utility analysis Was developed by

• J.R.Hicks & R.J.D. Allen

• Samualson

• Marshall and Jevons

• Slutsky

Marginal utility is

• Always zero

• Increases at a diminishing rate

• The utility derived from last unit

• All the above

“Utility or satisfaction is a subjective concept; therefore it could only be ranked”. The statement supports

• Cardinal utility

• Ordinal utility

• Behavioral theory

• None of the above

Indifference curve is always

• Concave to the origin

• Convex to the origin

• L shaped

• A straight line

A consumer is in equilibrium when marginal utilities are:

• Minimum

• Highest

• Equal

• Increasing

Law of Equi-marginal Utlity is a law of:

• Production

• Consumption

• Distribution

• Exchange

MRS is the rate at which the consumer is willing to substitute one good for another without changing the level of

• Income

• Price

• Satisfaction

• None