Which Statement Best Captures the Meaning of Transitivity of Preferences

question 50

Multiple Choice

Which statement best captures the meaning of transitivity of preferences

• A)If A is preferred to B, then B is less preferred than A.
• B)If A is preferred to B and B is preferred to C, then A is preferred to C.
• C)If A is preferred to B and B is preferred to C, then the preference for A over B is stronger than the preference for B over C.
• D)If A is preferred to C, then there exists B such that A is preferred to B and B is preferred to C.

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Definitions:

Arbitrageurs

Individuals or entities that take advantage of price differences in different markets by buying low in one and selling high in another to make profits.

Central Banks

Major financial institutions that manage a country's currency supply, interest rates, and serve as a lender of last resort to the banking sector.

Exchange Rates

The price at which one currency can be exchanged for another currency.

Fluctuate

To change or cause to change in level, strength, or value frequently, without steadiness or consistency.