Which Statement Is NOT a Critique of Utility Theory

question 262

Multiple Choice

Which statement is NOT a critique of utility theory?

• A) People do not make mental calculations of satisfaction.
• B) Utility is not measurable.
• C) Not all decisions are made rationally.
• D) Utility theory is limited to an analysis of individual demand behavior.

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Definitions:

Framing Bias

A cognitive bias where people decide on options based on whether the choices are presented with positive or negative connotations.

Positively Correlated

A relationship between two variables where they move in the same direction, meaning as one variable increases, the other does as well.

Trading Activity

The volume or quantity of buying and selling transactions in a financial market over a specific period.

Average Returns

The mean financial return of an investment over a given time period, calculated by summing the returns of each period and dividing by the number of periods.