The Preferences of the Representative Consumer Over Consumption and Leisure

question 16

Multiple Choice

The preferences of the representative consumer over consumption and leisure are represented by use of a

• A)benefit function.
• B)production function.
• C)dynamic function.
• D)utility function.
• E)preference function.

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Definitions:

Marginal Cost

The cost of producing one more unit of a good or service, often key to determining the optimal level of production.

Competitive Market

A market structure characterized by a large number of buyers and sellers, free entry and exit, and products that are similar enough to be considered substitutes.

Nonexcludable

A characteristic of a good or service that prevents individuals who have not paid for it from being easily excluded from its consumption or use.

Nonrival

A characteristic of goods where one person's consumption does not diminish the ability of others to consume the same good.