Microecon Week 2

Question 1

What term is used to describe ‘the pleasure or satisfaction that people get from their economic activity?’

Answer 1

Utility

Question 2

How is the utility function expressed?

Answer 2

U(X,Y)

Question 3

A > B, B > A, or A ~ B are notations of?

Answer 3

Completeness

Question 4

A > B and B > C and therefore A > C are notations of?

Answer 4

Transitivity

Question 5

What is the name of a curve that shows all the combinations of goods or services that provide the same level of utility?

Answer 5

Indifference curve

Question 6

Marginal rate of substitutions is…?

Answer 6

The absolute value of the slope of an indifference curve, the rate at which you are willing to forgo consuming Y to consume one more of X

Question 7

What is the term for when an individual is always willing to trade off A for B at a fixed rate?

Answer 7

Perfect substitutes

Question 8

What is the term for when an individual only gains utility from A if they also consume a defined amount of B?

Answer 8

Perfect compliments