Use the Following Two Statements to Answer This Question

question 128

Multiple Choice

Use the following two statements to answer this question:
I. If utility is ordinal, a market basket that provides 30 utils provides twice the satisfaction of a market basket that provides 15 utils.
II. When economists first studied utility it was believed that utility was cardinal, but it was later discovered that ordinal preferences are sufficient to explain how most individual decisions are made.

• A) Both I and II are true.
• B) I is true, and II is false.
• C) I is false, and II is true.
• D) Both I and II are false.

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Definitions:

Marginal Benefit

Marginal Benefit is the additional satisfaction or utility gained by consuming one more unit of a good or service.

Expected Profitability

The forecasted return on investment for a business activity or project, considering potential profits and losses.

Interest-Rate Cost

The expense associated with borrowing money, reflected as a percentage of the total amount borrowed.

Optimal R&D

The most efficient level of investment in research and development activities that maximizes the benefit to a company or society.