10 Questions
What is the present discounted value (PDV) defined as?
The value of each period’s dollar amount in today’s terms
What is the utility function in constrained utility maximization?
A mathematical function representing an individual’s set of preferences
What is the purpose of empirical tools in the economic toolbox?
To analyze data and answer questions raised by theoretical analysis
What are the key properties of indifference curves?
Consumers prefer higher indifference curves
What does marginal utility represent?
The additional increment to utility obtained by consuming an additional unit of a good
What does the concept of diminishing marginal utility suggest?
Consuming more units of a good makes the individual less happy
What does the rate at which a consumer is willing to trade one good for another represent?
Marginal rate of substitution
What does the budget constraint represent?
Combinations of goods an individual can afford to buy if they spend their entire income
What is the opportunity cost of a purchase?
The next best alternative use of money
What does an indifference curve represent?
Combinations of goods that keep a consumer equally well off
Test your knowledge on financial obligations, present discounted value, present value, and economic tools in this economics lecture quiz.
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