Question 05. Given an ordinal utility function, if bundle A provides a utility o
ID: 1127698 • Letter: Q
Question
Question 05. Given an ordinal utility function, if bundle A provides a utility of 20 and bundle B provides a utility of 40, then bundle B provides twice as much satisfaction as bundle A a rue b. False Question 06. Consider two goods, x and y. Which of the following events would cause a rotation of the budget line around the x-intercept? a. A change in the price of good x b. A change in the price of good y c. A change in the marginal rate of substitution d. A change in the budget constraint. Question 07. Given a convex indifference curve, a consumer may find it sometimes optimal to consume less than her entire budget. a. True b. False Question 08. The law of diminishing marginal utility states that as a person increases consumption of a product while keeping consumption of other products constant, there is a decline in the marginal utility that person derives from consuming each additional unit of that product. a. True. b. FalseExplanation / Answer
5. False
Explanation: According to the ordinal utility theory, the satisfaction derived by consumers from different commodities cannot be objectively determined but can be quantilatively ranked. Therefore, bundle B will be preferred by the consumer over bundle A but we cannot say that bundle B provices twice as much utility as bundle A.