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Microeconomics: Preference Relations and Utility Functions

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Microeconomics: Preference Relations and Utility Functions

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Questions and Answers

What is a necessary condition for a person's behaviour to be considered rational?

They consistently choose the option that provides the most non-material self-regarding benefits

They always prioritize other-regarding motivations over their own interests

Their preferences are based on monetary benefits

They have complete and transitive preferences over the outcomes of possible actions (correct)

What does it mean to have complete preferences?

To be able to compare and rank all possible outcomes in order of preference (correct)

To never experience indifference between two outcomes

To always choose the option that provides the highest monetary benefit

To prioritize non-material self-regarding benefits over other types of benefits

What is the implication of transitive preferences?

A person can always choose the option that provides the highest monetary benefit

A person's preferences are always based on other-regarding motivations

A person can order their choices from best to worst, allowing for ties (correct)

A person can never be indifferent between two outcomes

What is the relationship between instrumental rationality and expressive rationality in the context of motivations?

Both types of rationality can be modeled using economic techniques if they can be described as utility maximising behaviour Signup and view all the answers

What is the purpose of a binary preference relation ⪰ in the context of rationality?

To determine whether a person's preferences are complete and transitive Signup and view all the answers

What is the implication of a complete preference relation ⪰?

For any two outcomes a and b, either a ⪰ b or b ⪰ a (or both in case of weak preference) Signup and view all the answers

What is the definition of transitive preferences in terms of the binary preference relation ⪰?

If a ⪰ b and b ⪰ c, then a ⪰ c Signup and view all the answers

What is the relationship between a person's preferences and their utility maximising behaviour?

All types of motivations can be modeled as utility maximising behaviour if they can be described in terms of preferences Signup and view all the answers

What is the implication of a person's preferences being transitive?

They can consistently rank their outcomes from best to worst, allowing for ties Signup and view all the answers

What is the necessary condition for a person's behaviour to be modeled using economic techniques?

Their preferences can be described as utility maximising behaviour Signup and view all the answers