Microeconomics Chapter 3-4 Preference Relations Quiz

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What are perfect complements in economics?

Goods that can be substituted for each other without any loss of satisfaction

Goods that are consumed independently of each other

Goods that are always consumed together in fixed proportions (correct)

Goods that are substitutes with varying proportions

Which of the following best describes the utility function in microeconomics?

It assigns a random number to each bundle without any specific criteria

It assigns a whole number to each bundle based on the prices of goods

It assigns a real number to each bundle based on the quantity of goods (correct)

It assigns a real number to each bundle based on the preferences of the consumer

Why is a utility function in economics referred to as ordinal utility?

Because it assigns utility based on the consumer's preferences

Because it considers the size of the utility difference between consumption bundles

Because it assigns random utilities to different consumption bundles

Because it focuses on ranking different consumption bundles, not the magnitude of utility (correct)

In microeconomics, what is a characteristic of a preference relation?

It only considers complete preferences Signup and view all the answers

Which statement is true regarding perfect substitutes in economics?

Perfect substitutes have utility functions that assign real numbers to bundles Signup and view all the answers

How do perfect complements differ from perfect substitutes?

Perfect complements are always consumed together in fixed proportions while perfect substitutes are consumed in varying proportions Signup and view all the answers

Which axiom of consumer theory assumes that any two bundles can be compared?

Complete Signup and view all the answers

What does it mean when the text states that 'the x-bundle is indifferent to the y-bundle'?

The consumer is indifferent between the x and y bundles Signup and view all the answers

In terms of preference relations, what does it mean when x is weakly preferred over y?

X is at least as preferred as Y Signup and view all the answers

Which type of bundles are described by indifference curves?

Bundles equally preferred to a reference bundle Signup and view all the answers

What does the axiom of transitivity in consumer theory imply?

If X is weakly preferred to Y and Y is weakly preferred to Z, then X must be weakly preferred to Z Signup and view all the answers

What does it mean when a consumer is indifferent between two bundles according to preference relations?

The consumer has no preference between the two bundles Signup and view all the answers

In microeconomics, what is assumed about consumers and their choices?

They choose the best bundle of goods they can afford. Signup and view all the answers

According to consumer theory, what is a consumption bundle?

A bundle that consists of two types of goods. Signup and view all the answers

How do consumer preferences work in microeconomics?

Preferences depend on each consumer's needs and desires. Signup and view all the answers

What do consumer preferences represent?

The relationship between different consumption bundles. Signup and view all the answers

In microeconomics, when is one consumption bundle strictly preferred over another?

When x is more preferred than y in the x-bundle compared to the y-bundle. Signup and view all the answers

What does it mean if a consumer is indifferent between two consumption bundles?

The consumer derives the same level of utility from both bundles. Signup and view all the answers

Microeconomics Chapter 3-4 Preference Relations Quiz

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