According to the Utility Theory, If Bundle a Is Preferred

question 64

Multiple Choice

According to the utility theory, if bundle A is preferred to B, and bundle B is preferred to C, then A is also preferred to C.Under no circumstances will the individual prefer C to A.Identify this assumption on preference.

• A)Completeness
• B)Rationality
• C)More-is-better
• D)Convexity
• E)Monotonicity

---

Definitions:

Long-Run Aggregate Supply Curve

A graphical representation that shows the relationship between the overall price level and the quantity of goods and services produced by an economy when all resources are fully employed.

Cyclical Unemployment

The variation in unemployment caused by the ups and downs of economic cycles, including recessions and expansions.

Recessionary Gap

A situation where an economy's actual production is less than its potential output, often leading to unemployment and underused resources.

Potential Output

The level of productivity an economy can achieve with full employment and resources utilization, without causing inflation.