The assumption of completeness means that the consumer can rank all possible consumption bundles. T or F?
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A consumer gets utility from commodities x1 and x2. When p1=2 and p2=5, the consumer spends all of her income on x2 and never buys any x1, no matter how large or small her income is. Based on this information, her friends have concluded that x1 is necessarily an economic bad for her. Are they correct? False True 2. A consumer's preferences are well-behaved and consistent with diminishing MRS. The consumer maximizes her utility subject to a budget constraint. You calculate her ordinary demand functions but after plugging in current prices and incomes, you solve for a negative consumption level for x1! Which of the following is a valid conclusion on your part: There are multiple "true" optimal consumption bundles. None of the answers is correct. The true optimum has the consumer consume none of x2. The consumer will sell good 1. The consumer will spend all her income on x2. The consumer will sell good 2.
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Which of the following is NOT correct with regard to utility? A. Utility expresses the degree of satisfaction that a consumer derives from the consumption of a product. B. Cardinal utility implies that utility can be measured in some way. C. The purpose of consumer behaviour is minimization of consumption expenditure. D. Individual consumer subjectively assigns units of value to the utility derived from the consumption of successive units of a product. E. Ordinal utility involves the ranking of different bundles of goods and services in order of preference.
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In the videos, we discussed certain assumptions we make when examining consumers' preferences. Which of the following was NOT one of the assumptions we make? Multiple Choice a. Preferences are transitive. In other words, if I like A better than B, and I like B better than C, then I also like A better than C. b. Preferences are non-satiated. That is, in general, more of something is better than less. c. Preferences are universal. That is, in general, people like the same things and dislike the same things. d. Preferences are complete. By that, we mean it's possible to compare two goods and decide: I like this better than that, I like that better than this, or I like them both the same.
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