To Understand Consumer Behavior and How Consumer Decisions Are Made

question 114

Multiple Choice

To understand consumer behavior and how consumer decisions are made, it is necessary and/or sufficient to work with:

• A) cardinal utility functions only.
• B) ordinal utility functions only.
• C) both cardinal and ordinal utility functions.
• D) either ordinal or cardinal functions, but not both.

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Definitions:

Variable Input

An input in the production process that can be adjusted in the short term to change the level of output.

Marginal Product

The additional output that is produced by adding one more unit of a specific input, while holding all other inputs constant.

Marginal Cost Curve

A graphical representation showing how the cost of producing one more unit of a good varies as the production volume changes.

Marginal Cost

The cost of producing one extra unit of a product or service.